Reflecting on their data, The Hartford recently identified the Top-10 claims a small business would likely encounter. Considering our own data, we tend to agree with what The Hartford has discovered. Making the list at #10, is burglary & theft – which has been appearing with increasing regularity. This includes employee theft. We’ll be keeping an eye on this trend and will continue to work with our clients to identify their individual exposures, including their cyber liabilities. To see the full list, please click here: The Hartford Top-10 Small Biz Claims.
2015 New England Insurance Outlook
Premiums will continue to stabilize through 2015. Despite absorbing losses from heavy snows, Tropical Storm Irene and Hurricane Sandy, Northeast-focused insurance carriers are becoming more flexible with their renewal pricing. Stock market investment performance and stable reinsurance costs are certainly contributing factors. But it is competition that is keeping the hard market in check. In 2014, the larger, more diverse, or more disciplined carriers who were less effected were delivering smaller premium increases. To prevent a hemorrhage of market share, the regional carriers were forced to limit their increases. For 2015, unless a risk is located within 5-miles of the coast or has negative loss experience, thanks to this peer pressure, increases no longer appear imminent.
More good news… Several of our carriers are capitalizing on this market fluctuation. Beginning in late-2013, they reorganized their backrooms or spun off unprofitable branches of their operations. This produced savings. Those savings are being re-deployed as new underwriting programs and reduced rates. We began seeing the benefits of the carrier’s efforts in the 2nd half of 2014. In some cases we had to switch clients to a new carrier, but many saw level or decreased premiums at renewal. Several saw double digit premium decreases.
From my perspective, unless there is an event that will adversely effect all insurers across the board – like a stock market crash – the trend of moderation will continue… and could lead us into a softening market.
As always, we will continue to investigate options for each of our clients in advance of their renewal dates – to insulate them from premium hardening and to capture as much softening as possible. In the meantime, the spring thaw has arrived! We’ll feel the warm sun on our faces very soon! -Scott H. Sutter, President of SRT
Shark in the Water
As the name of the insu
rance implies, companies secure Directors & Officers Insurance – commonly referred to as D&O – to protect their execs and board of directors. It’s a wonderful safety net that could kick in to pay for defense costs and/or monetary awards, should the board be sued by one of its membership. However, like any insurance policy, it comes with its own set of coverage limitations and exclusions. Some of these limitations and exclusions are well known because they are easy to spot – Employment Related Practices Liability, for example. Then there are the ones that lurk quietly and unannounced, because they are hard to see – like a shark in dark waters. One of them, is the Failure to Insure Clause.
After being in the insurance business for more than 15-years, I’ve come to conclude that agents rarely, if ever, point out this dangerous pitfall to their clients. I, however, am quick to address it – because I see it as a valuable tool. The exclusion is an incentive for the board to weigh their insurance coverage. When the directors consider altering their insurance, I always point them back to the contracts, Master Deeds, and By-Laws that largely spell out their responsibilities regarding insurance. If the responsibilities and the actual insurance doesn’t marry up – I remind them of the Failure to Insure exclusion.
In regards to contracts, Master Deeds, By-Laws, etc… They are legal documents. Therefore, it is only appropriate for an attorney specializing in such law to interpret them. Not insurance agents. Not bankers or CPAs. Attorneys. Only. This is why at SRT, when we bring on a new client, we immediately engage the client’s lawyer. If interpretations of the governing documents have not been made to determine the insurance responsibilities, we work with their attorney to make that happen. In the end, everyone is better protected, because we all understand where our responsibilities begin and end – effectively minimizing our exposure to the Failure to Insure pitfall.
-Scott Sutter