Risk & Business

The insurance industry has a youth problem. There is not a lot of interest from young people to enter the insurance industry. This problem is not new it is just becoming more critical as the industry ages. There are a lot of reasons that we can talk about but a recent study may have figured it out. The study showed that 70% of the millennials place work/life balance as the most important reason for choosing a career. The insurance industry does not have the reputation of being a career where there is the option to balance life and work. Take for example the job of being an insurance producer. If you are a young agent and you want to build a book of business, you are looking at 5 to 7 years of hard long days selling and servicing clients to build a good income. Now the rewards are great after you hit your stride and develop your book of business, but getting there is brutal. Trying to win over a young talented person about becoming an insurance producer may just be a turn off when the r...

A recent study by JD Power revealed that small business insurance buyers prefer to by their coverage from the same agent that sold them their homeowners or auto insurance. The study also showed that insurance companies that focus on personal lines coverage are also writing the majority of small business insurance. The main driver for this trend is personal service. Customers are use to having a relationship with their homeowners/auto agent, so it is natural for them to go to that person when buying insurance for their business.  The other dynamic to this is that in commercial insurance agent shops, small business is usually unattended, allowing for renewals to go by each year without a single live contact by the agent.  Small premiums and commissions do not leave a lot of room for service before losing money. The lesson here is that in order to successfully write small business insurance, companies and agents need to focus on it and personalize it to achieve growth. This wil...

The web masters at CNC Insurance have launched our new website! . It was designed to make navigation easier and contacting us faster. Also the new tab "Latest Tips and News" takes you to our informational website www.bizinsurancetv.org .  This site will have some of the latest tips on reducing the cost of business insurance and risk management techniques that can help your business. Take a few minutes and go to www.cncinsurance.com and see the new look. If you have any comments regarding the website please email me your thoughts. Until next time be careful out there and know your risks. G. Kevin Nemith President CNC Insurance Associates Inc. Serving DE, MD, PA, VA, & NJ www.cncinsurance.com www.bizinsurancetv.org

Everyone knows the problem the healthcare.gov website has had in its first year of operation. Success stories from insurance buyers have been slow coming. The website however is successfully changing the paradigm of buying complex insurance products online. It has been a decade or more since the big auto insurers have been selling auto insurance online, along with the life insurers. However these products in comparison to other insurance products, are relatively less complex. Health insurance on the other hand is a very complex insurance product. What healthcare.gov is doing, along with the navigators that assist during the process,  is showing a whole population that complex insurance like business insurance can be bought online. This is a major wake up call to insurance companies and agents/brokers. The Federal government is going to make insurance buying online the "new" normal, even for business insurance. It may take a while but the days of  business insurance company we...

Google is one of the few companies that are developing a self driving car for mass production and sale.  The other car companies like Toyota, GM, & Ford are doing the same. I can  imagine in a few years these cars will be blazing down the highway at 60 mph with the passengers reading their IPads and texting because the car is doing the driving.  Now comes the insurance question. If the robot malfunctions and the car crashes into another, who is liable?  This is a question that insurance companies are asking right now. The answer is important because it could change car insurance as we know it.  People buy car insurance to protect them from the financial risk of causing injuries with the vehicle. As a matter to fact most of the premium in auto insurance is the result of  driver caused liability losses. If robots drive, one it is expected that accidents will be minimum and also the car owner would not be responsible for crashes, or at least minimally resp...

The Delaware Legislature voted to reduce medical reimbursements on work comp claims. This is an attempt to reduce Delaware work com rates which pointed to medical costs as the reason for the rate increases over the last few years. The reductions will be phased in over the next 3 years and will be up to 30%.  A Delaware task force brought to the legislature findings of their study on rising work comp rates and doubled down on medical costs as the reason.  The question now is how will the medical community react to this new law ? Will this really reduce comp rates over the next few years? Only time will tell.  We will revisit this again real soon. Until next time be careful out there and know your risks. G. Kevin Nemith President CNC Ins. Associates Inc. and the Small Business Insurance Center Serving DE,MD, VA,NJ, & VA www.cncinsurance.com www.bizinsurancetv.org

Based on a recent report, 3.7% of construction workers will get injured on the job this year. Take into the fact that the average work comp claim in construction usually tops over $10,000, and you can understand why work comp is a cost driver. The direct cost of workmans comp insurance continues to rise. In most construction trades work comp premiums can be 40% or more of the total commercial premium in a 12 month policy period. The only way to reduce these costs is in safety practices. Companies that avoid injuries pay less in work comp premiums hands down. Safety practices and safety equipment may be expensive and time consuming but the payoff is big. Not only do employees have a safer work environment, but the competitiveness of the company that avoids injuries is enhanced.  There is one word in work comp cost reduction that every construction company needs to know and that word is "Safety". Those that avoid injuries pay less, period!! Until next time be car...

I always take the time each spring season to remind clients and business owners to get prepared for the upcoming storm season.  Though the hurricane prognosticators are announcing less activity this year, a few could be major. So take the time and review your properties and assets and make sure your insurance coverages are up to date. Also have a business interruption plan in case you are down a few days or weeks.  Small preparation today will could help enormously if you are damaged by a summer storm. Until next time be careful out there and know your risks G.Kevin Nemith President, CNC Insurance Assoc. & The Small Business Insurance Center Serving DE, MD, VA, NJ, & PA www.cncinsurance.com www.bizinsurancetv.org

I was reading a national news story about Farmers insurance company filing a law suit against certain towns in Illinois. The reason behind the suit is the reimbursement of insurance claims paid out due to the towns not being prepared for man made climate change. This is a really interesting case and the whole country should  follow this to see how it comes out.  The reason this is an important case is the business and politics of man made climate change could be turned on its ear by the insurance industry. If towns and cities are forced to pay back insurers because they did not implement protections from climate change then you might start hearing a different tune about man's affect,on the weather. Another way to put this is, the insurance industry is going to test the theory of man made climate change in courts.  Stay tuned to this one folks. Until next time be careful out there and know your risks. G. Kevin Nemith President CNC Insurance and the Small Business Insuran...

A few years ago Congress approved the formation of the Federal Insurance Office (FIO). This was in response to the 2008 meltdown of AIG and numerous other banks and money institutions.  For the first couple of years the office has not been in the insurance headlines very much. Lately however, it seems that the FIO is in every insurance publication I read. The office is becoming very active. Currently they are probing the need for Federal Government intervention into the 150 year old State regulation of insurance. Also I saw headline of the FIO  looking into the affordability of auto insurance. These actions are a precursor, in my opinion, of a full Federal regulatory takeover of the insurance sector. It may take awhile to achieve this, but State's will have no ability to stop it. The State regulatory system has been exemplary over the years as insurance has proven to be stable and well capitalized and did not suffer the collapse that banking and S&L's e...

Commercial insurance agents and brokers, are continually trying new ways to bring value to their clients. Many offer risk management services as a value proposition. However after years of studying the science of risk management and enterprise risk management, it occurs to me that it is extremely difficult for agents to provide full risk management services on commission only.  Most of the time it is only risk management "lite". If agents and brokers really provide the needed risk services to businesses only being compensated by commission then they could not make a profit in the long term.  Don't get me wrong even risk management "lite" is a big help to business owners trying to reduce risk in their business.  However, agents and brokers need to make their clients understand that they can only do so much on what they get paid with commission.  I predict that more and more will offer greater risk management services  for  a fee in order to do a better job ...

Most business owners will sign contracts in the course of business, but will never read them. When problems arise however then the terms in the contract are discovered and usually they are not good for the business owner. Today's contracts are very much loaded in favor of the lessor, the one that lets the contract. The business owner who signs them does not realize that all the terms go against them until it is too late.  Make sure you read every contract before you sign. Understand who is responsible for damages and watch words like "hold harmless" and  "indemnification". Get your attorney to review the wording and get your insurance broker to make sure your insurance can cover the terms of the contract.  Don't take contracts for granted,  read , read , read, before you sign. Until next time be careful out there and know your risks. G. Kevin Nemith, President of CNC Insurance Associates, Small Business Insurance Center Serving, DE, MD, PA, NJ, and VA ww...

Small business owners are faced with an onslaught of emerging risks. Cyber theft, supply chain disruptions, economic downturns, and employee lawsuits are just a few of the new and complex risks on small business. In a recent poll, small business owners put high trust in agents and brokers to help them. With education and insurance protection, these owners feel confident they can handle these risks and continue to grow their business. Agents and brokers are paid commissions from insurance companies for the placement of insurance. Very few of these agents and brokers charge their customers for the extra services given in education and risk management. The question now becomes how long can the agents and brokers provide these additional services at the commissions they get paid from the insurance companies. Only time will tell. Until next time be careful out there and know your risks. G. Kevin Nemith, Pres. CNC Insurance Associates & The Small Business Insurance Center...

The Biggert-Waters Flood reform act was suppose to be the legislation that would wean flood insurance policy holders off the decades old Federal subsidized insurance rates. These low rates have made the flood program affordable for many,  but in a fiscal mess. With many policy holders crying "no fair", Congress is now pushing to amend the legislation to soften the rate increases and continue the subsidies. This is a good thing for the policy holders but is really irresponsible as the flood program continues on a downward spiral.  Sooner or later the "hard decision" has to be made in order for the flood program to be self sustaining. If not the Federal Government will continue to support the unrealistic rate and premiums. The flood insurance program is promoting residential and commercial growth in flood prone areas. If the premiums were accurate my guess would be that less growth would happen in those areas because the cost would be to high for mo...

It was recently announced that the DCRB and the Insurance Department of Delaware have reached an agreement on the increase in Delaware work comp rates. It looks like 14% is the new number for 2014. Business owners may feel somewhat relieved as it was discussed that the rates should go up 40% or more. However 14% is nothing to sneeze at, as most business owners will still have a tough time paying for the increase in a lagging Delaware economy. The work comp rate making game has become an event most Delaware business owners have come to expect. Each year DCRB gives a suggested loss cost rate increase and the Insurance Department pushes back. Sometime after the start of the new year new rate structures are approved. What is problematic with this system is the affect it has on small business and the Delaware economy. Business owners have a hard time planning their budgets for the new year as work comp is a big number on their income statements and has to be factored in. Most of my clients ...

A recent insurance industry study makes is very clear that most insurance buyers are willing to buy insurance from other than agents and brokers. Names like Google and Amazon were top on the list as places consumers would buy insurance from. What does this mean for the traditional model of insurance selling? Change is on the way fellas! Over the last few decades online selling of insurance has continually grown and has dramatically realigned the agent/broker model of selling insurance. Agents and brokers have adapted by having online abilities for consumer buying. However if big marketing companies like Google and Amazon get into the business of selling insurance, agents and brokers may find it hard to compete. Most insurance buyers feel insurance is a commodity, so big marketing budgets could make it hard for traditional sales models. The one saving grace for agents and brokers is the service side. Google and Amazon may find it hard to deliver the one on one hand holding that agents a...

NAHRAB II is still sitting on the shelf in Congress. The modern insurance agency licensing bill, that could easily help agents and consumers alike , has yet to be passed. The bill would allow one license for agents and full reciprocity from States, so multistate insurance needs can easily be handled. Currently, agents must individual licenses in each of the states it needs to write coverage in.This creates major  expenses for agents and hassles for consumers. The house did pass the bill and now the Senate needs to bring it to the floor for a vote. However with all the fiscal problems the country has, insurance licensing is not top priority. Multistate licensing has been on the insurance agents wish list for decades. Lets hope 2014 is finally the year that it happens. Keep your fingers crossed ! Until next time be careful out there and know your risks. G. Kevin Nemith President CNC Insurance Associates Inc. and the Small Business Insurance Center Serving DE, MD, PA, NJ, & VA...

I know this blog post may be jumping the gun a little, but the use of drones will cause some real insurance issues. Now we may be some years away but drones are going to be used in commerce and in business. So how will the insurance industry respond.  Are they insured like autos? Are they covered like property, or airplanes ? What about the liability issues when the drones go rogue or the operators make errors. Can you imagine driving to work and being hit by a wayward drone making a delivery?  What about a competitor using a drone to spy on your best customers and collect data on them. Does this sound out of this world?   Get ready insurance industry, here come the drones ! G. Kevin Nemith, President of CNC Insurance Associates Inc. Serving DE, MD, VA, NJ, and PA www.cncinsurance.com www.bizinsurancetv.org

For many who have lived near flood prone areas and have flood insurance, get ready, your costs are going up. Due to the recently passed Biggert-Waters flood reform act, rates are going to be adjusted to more accurately reflect the risk of flood. For many years flood insurance has been under priced. The Federal program has been subsidizing the rates for years which has given people the affordability to build in coastal areas and have coverage. However, as the program struggles financially, congress was forced to pass legislation to make rates more accurate. Unfortunately for many flood policy holders they are having sticker shock as rates have gone up significantly. Will the increase in rates slow down the residential growth in coastal areas? It might. If home owners cannot afford the protection that flood insurance gives them, then they will be less likely to build homes in areas that are prone to flood. Stay tuned to see how this plays out. ...

Well it is a new year and the data theft at Target stores will most likely test the coverage of the commercial general liability policy. To date Target has not announced their insurance coverage but odds are the claims will be sent to the liability policy. Since data theft claims are relatively new in the insurance industry, the history of legal precedents is very thin. The commercial general liability policy has not been tested as might happen in the Target case. Cyber liability policies have been in force to handle data crimes but they too do not have a lot of claims history. So stay tuned to this story as it may completely set the future precedent on how insurance policies respond to data crimes. Until next time be careful out there and know your risks. G. Kevin Nemith  President of CNC Insurance Associates Inc. Serving Delaware, MD, PA, NJ & VA www.cncinsurance.com www.bizinsurancetv.org