Risk & Business

On Monday health insurance companies were to start posting and creating communication and education websites so consumers can easily buy health insurance starting in 2013. In addition these self help guides were to feature the state based health exchanges in an effort to get consumers and business owners to buy their health insurance from these exchanges. The state websites also have self help menus and links to service personel that can help buyers of health insurance through the process. Whats missing?  There is no room in these platforms for agents & brokers. This is a disturbing realization as it looks like the new health care law is not including the value that agents and brokers bring to the table. National agents & brokers organizations are fighting to get to that table. In addition many are already telling their clients that they can add major value to their decision making but will have to charge outside fees as commission dries up. Lets face it, the federal health...

Work Comp is problematic. Rates are going up because profitability in the line is going south. Medical costs are also escalating. Employers are feeling helpless and are looking for more control. So this becomes a great opportunity for captive growth. Employers are going to look hard at forming their own captives or getting into group captives in an effort to gain some control over work comp. In captives, employers can establish medical cost saving strategies with medical providers. In captives, employers have a say in claim payouts and settlements. In captives, employers can establish risk management practices that can affect their over all costs. Captives will give employers a chance to stop the madness in work comp. However with more control comes more risk. Employers are not going to be able to escape the risk issues surrounding work comp. Captive programs are going to have to be structured with excess coverage that is going to have to cover over increasing severity. Time will tell ...

The long term care insurance marketplace is going through some major changes which may not be good for policy holders. As the claims for these policies are being paid insurance companies who wrote the policies are realizing they have under reserved. This is causing more claim payouts than were expected. The result of this is a lot if insurance companies are no longer writing this type of coverage. With very few players in the market, long term care insurance rates are just going to go up over the next few years. Small business owners and larger business owners who have insurance and risk plans for their companies, usually include some long term care. However as this market contracts, and the costs go up, I can imagine that this insurance product will be dropped from these risk plans. Until next time be careful out there and know your risks. K G. Kevin Nemith , Small Business, Business Insurance Specialists, Serving Delaware, Pennsylvania, Maryland, and New Jersey.  www.cncinsuran...

The Federal Government bail out of AIG from 2008 is finally winding down, The Government sold the majority of its stake in the company to the private sector. AIG bought back a good portion of its shares, and the public bought the rest. U.S. taxpayers will make some money back from this sale but less than anticipated. The Federal government is winding down the TARP bailouts as the election approaches. The pressure on the administration to show positives from these bailouts is the reason. Hopefully the 300 or so banks that have yet to pay back the money will finally start to do so as pressure builds. Until next time be careful out there and know your risks. K www.cncinsurance.com www.bizinsurancetv.org

I came across a recent article about the newly formed Federal Insurance Office, (FIO), looking into the Reinsurance market. What does "looking into" mean?  Well from what I read the Feds want to determine if they need to regulate the reinsurance marketplace or be a major player in this field. The reinsurance market is a back stop for general insurance companies. When catastrophes happen, general insurance companies do not absorb all the losses themselves. They buy policies from the reinsurance market. This market has protected the country and communities from economic collapse after disasters. As an example following Katrina, 99% of all insurance claims were settled and paid with money from the reinsurance market. It does concern me that the FIO's inquiry may start discussions of more regulation. The mechanisim of these insurers, insuring insurance companies, has worked for over 100 years. My words for the FIO, "if it is not broke don't fix it". Until next t...

Currently, the National Football League is in a battle with its insurers over coverage for player concsussions. The league has been sued by former players for the long term effects of concussions. The league is asking its insurance companies to defend and take care of the claims. The insurance companies are saying "no". Their reason is no one can determine when the occurrence of concussion happened. Here is the issue. A player who is retired suffers from the effects of concussions into his 60's, so when did the concussion happen ? What game? What quarter? Which helmit to helmit hit? The insurance coverage is written on a "per occurrence" basis, so you can see the problem here. During the time the league was insured, around 1968 to the present, there have been 12 or more insurance companies providing coverage. The insurance companies are saying," prove it was on my watch". I am sure this will be around a long time. There is a bunch of money at stake and...

Currently, the National Football League is in a battle with its insurers over coverage for player concsussions. The league has been sued by former players for the long term effects of concussions. The league is asking its insurance companies to defend and take care of the claims. The insurance companies are saying "no". Their reason is no one can determine when the occurrence of concussion happened. Here is the issue. A player who is retired suffers from the effects of concussions into his 60's, so when did the concussion happen ? What game? What quarter? Which helmit to helmit hit? The insurance coverage is written on a "per occurrence" basis, so you can see the problem here. During the time the league was insured, around 1968 to the present, there have been 12 or more insurance companies providing coverage. The insurance companies are saying," prove it was on my watch". I am sure this will be around a long time. There is a bunch of money at stake an...

During the last 5 years or so, business owners have been getting hit with what seemed to be higher experience mods. The experience mod is the work comp calculation that is suppose to reflect the loss history of the company. The problem arises when the mod goes over 1.0. When this happens businesses have trouble with industrial and commercial vendors that require mods to be under 1.0 and they are penalized on the premium they pay. When the Delaware Comp Bureau reduced rates in 2008-2011 they also reduced the expected loss rates that are in the mod calculation. Some businesses went over 1.0 even though they had no claims, just because the reduced rates affected the math calculation.  During this time,  Delaware business owners work comp premiums went down. Unfortunately, now they are dealing with mods that are over 1.0. It goes to show that when it comes to business insurance you don't get something for nothing. Work comp rates were set to low to cover claims. Thi...

Delaware Captive division just announced the growth of  Delaware Captive  insurance companies to the tune of 800 percent.  With over 300 licensed captives, Delaware is now one of the leading domiciles in the country. Hats off for Commissioner Weldin and her staff.

I just saw a Delaware Comp Bureau circular where they are asking the state insurance department to approve a 43 percent rate increase next year. The circular states that this increase is needed because of the hyper reduction of rates that has occurred over the last four years. We saw this coming. I even did a few blog post regarding this. The reduction of work comp rates the last few years was unsustainable. Losses are increasing as more and more employees are going back to work, and frankly there is not enough premium to support a profitable business model for insurance companies. If the rate increase is not granted, many insurance companies will find themselves on the losing side of profit. This will add instability to the Delaware work comp insurance marketplace. On the other side of this are business owners who are still having a tough time from the recession and now will have to deal with work comp increases they will hardy be able to afford. This size of increase could put some b...

After 25 years in the business insurance "business", I would say the current marketplace in Delaware is tumultuous. Some companies are raising rates while a few are decreasing rates. Work Comp rates are going up but not as bad as experience mods which are affecting every business in Delaware. Property insurance rates down near the beach are staying consistant but wind deductibles are increasing. Long haul trucking is practically taboo in the standard market as most of these businesses have to go to the specialty markets for coverage. A few major players have pulled out of the school bus coverage market which has created a stir amoung school districts. And finally, large businesses who pay lots of premiums are stepping into the captive arena and starting their own insurance companies. Whew ! there are lots of things going on in business insurance in Delaware. Stay tuned. Until next time be careful out there and Know your risks. K Blog by G. K...

Here is the situation, the business insurance broker/agent just realized they messed up. Unfortunately the error caused an uncovered claim against one of their clients. Now what? The first thing an agent is taught to do is call their errors and omissions insurance carrier and say nothing to the client. But is this the right strategy? Many legal scholars and risk managers are starting to suggest different. How about an apology. Yes the simple and effective apology. Now does this dictate liability? Does the apology make the business insurance agent/broker fully responsible? Many courts are now saying not neccessarily. The simple act of saying to someone you have harmed that your sorry does not mean that your at fault. It simply means that you are being human and are genuinely empathetic to the plight of others. Interestingly it is now showing that there are less law suits following an apology. Caution here, always contact your errors and omissions insurance carrier before any communicati...

The insurance industry is adding jobs again. This is a good sign that the insurance market place is getting back on their feet. But what kind of jobs ?  Most of the jobs are processing and in claims. Sales jobs are still in demand but there are not as many people who want those jobs. In the business insurance world the trend of more company jobs and less sales jobs is a trend that the Internet may be driving.  Business insurance agents seem to be the ones that will have a hard time filling sales jobs while the insurance companies will be flush with applicants. Time will tell if sales opportunities that are opening will be filled. Until next time be careful out there and know your risks. Blog by Kevin Nemith  business insurance and small business insurance specialists serving DE, MD, PA, NJ,

Owner controlled insurance companies called captives are growing at a record pace here in Delaware.   Small business owners that have enough size and premium to form their own insurance company are doing so. This change to the business insurance  marketplace is having a dramatic affect. Traditional insurers are starting to take notice as more large premium policies are moving into the captive space. Time will tell how far this may go but as I see it, captive insurance companies will continue to grow and take premium dollars out of traditional insurance companies pockets. Until next time be careful out there and know your risks. Blog by G. Kevin Nemith. President of CNC Insurance Assoc., Business Insurance , Small Business Insurance specialists serving Delaware, Maryland, Pennsylvania, and New Jersey.

If you own a business then you have paid business insurance. You can't open the doors without it. Many ask however why is it so expensive? You may be surprised to know it is not the 'greedy insurance companies". Business Insurance is expensive because there are claims, lots of them. Most insurance companies pay out 80% of every dollar they bring in. This doesn't give much of a margin for profit by the time you add in expenses. Here in Delaware, the business insurance rates may be slightly higher than average because we are a small state and there just isn't as many businesses for insurance companies to insure. Looking to keep costs down, business owners should look to specialists that insure businesses. Thats where we come in, so don't hesitate to call. Until next time be careful out there and know your risks. G. Kevin Nemith, Agent, Broker,  CNC Insurance Associates in Dover Delaware is a specialist in business insurance and small bsuiness insurance, that can...

General liability policies that insure businesses have many exclusions in the contract. One of those exclusions that has recently been talked about in the media is "intentional acts". The recent Freeh report regarding the Penn State sexual abuse scandal, brought to light the intentional cover up by the administration during the time the abuse was occurring. Now the question is will Penn State's liability policy cover the lawsuits that are being brought against the school? The insurance company that covers the school says no, citing the exclusion of "intentional acts . This is certainly going to cause a legal battle between two big institutions ,  that will surely set the precedent on how general liability policies will respond in the future. Until next time be careful out there and know your risks. G. Kevin Nemith.  President CNC Insurance Assoc. business insurance and small business insurance specialists. Risk Management Consultant serving Delaware, Maryland, Penns...

Business insurance has always had the focus on price and product. Anyone who has had to pay for the high cost of business insurance every year had no choice but to focus on these two items. Change is occurring however. Technology has made business insurance products and price very similiar between companies but risk management services are now becoming the defining feature. The trouble that insurance companies are having however is they cannot do a solid job at it. In other words business owners are getting "risk management light" because the insurance company business model just does not have the expense covered in their margins. Enter the insurance broker, who insurance companies are looking at to cover these services. Brokers ,like the insurance companies are trying to find a way to pay for giving risk services to clients. So how is something so important in today's business climate going to get accomplished when there is no money set aside to do it. My thought is comp...

Lexus Nexus insurance exchange gives business insurance agents and brokers a new tool to submit their clients insurance needs to the marketplace. Business insurance has always been a little behind other industries in technology, but now the industry is carching up. I would imagine that other vendors will follow suit. Until next time be careful out there and know your risks. K

I was thinking the other day about the health mandate and how it compares to the state mandate with auto insurance. Every state mandates by law for individuals to buy auto insurance for the common good. With these statues on the books, the growth of online buying of auto insurance has exploaded. Folks can buy auto insurance without the help of an agent. The mandate forces buyers to the front door of insurance companies. Insurers do not need agents to "rustle" up the business and sell it. So as the studies show, agents are becoming less and less important in the buying decisions of auto insurance. Now comes Obama Care with a fresh supreme court "ok" on the mandate and I am wondering what is going to happen to agents. My prediction is we will see the same trend as auto insurance buying. The health mandate will force buyers to the doors of insurance companies via the exchanges and no agents will be needed to produce the business.  Agents will also be forced out of the ...

Insurance consultant Chris Bursnd had a nice article in the Insurance Journal about producer compensation. Chris outlined how agencies will not be able to keep the same compensation packages as in the past. In order to stay viable business insurance agencies will have to pay producers less and producers are going to have to produce more. Sounds somewhat depressing right? Well I think Chris is correct as I live this every day. Insurance carriers are reducing commissions and the margins for profitability are slight. Producers will have to be paid less and they will have to prOduce more. The questions arise around how much "extras" do agencies have to proVide to give the value added service that clients expect, and how much do you charge for the services. This is the miliion dollar question that business insurance agency owners will have to figure out very quickly. Until next time be careful out there and know your risks. K