My technical support has been lacking the last few months, so I’ll be posting the promotions here as well as notifying agents through any other means available. 

So, this month (and due to notification issues, I’ll extend this promotion through August 31) – I’m providing 2.5% additional commission on all environmental risks.

This includes risks such as:  Environmental contractors, environmental consultants, contractors pollution liability for non-environmental contractors, mold coverage on anyone who needs it, restoration contractors, inspectors, and site pollution risks. 

Lines of business that qualify would be Professional Liability, Contractors Pollution Liability, CGL (in combo), and any executive protection lines such as D&O, EPL, or privacy liability.

Send risks!  And if you would like a list of upcoming promotions, please shoot me an email (chrisc [at] usrisk [dot] com) and I’ll send you my campaign schedule.

Stay tuned for more info….

Both of these people are on the company side of the insurance equation.

I am appalled that “broker” is used as a synonym for “manipulated”, “tricked”, and “deceived”.  I do not generally hear brokers use the term that way, but I sure do hear it from company people.

I imagine there are many, many brokers — both wholesale and retail — that spin submissions or facts to get what they want without regard to the long term impact that has on their credibility.  One would hope that’s the exception rather than the rule.  But apparently not, if underwriters have assumed a vernacular that equates what we do every day with lying and manipulating.

As a wholesale broker my duties are split.  The agent is my customer.  The carrier is my vendor.  I have to treat both with respect and honesty if I want long term relationships with both.  I am, as one of my colleagues said, a “custodian of the process”.  I cannot sacrifice the long term relationship for a short-term outcome on an individual risk.  I must manage the relationships for the long term and balance the needs of both groups.

The reaction I get from my markets when I discuss this philosophy with them reinforces my perception that most wholesalers do not view themselves the same way.   Rather, they treat the carriers as peddlers and adversaries.  It’s no wonder the carriers view the brokers as necessary evils rather than partners in business development.

It’s a sorry state of affairs, although I will say that it gives me a tactical advantage.  My carriers trust me to do the right thing, not to do what’s expedient in the moment.  That provides me with great opportunities where others may not enjoy the same.

Please click here to access a compilation of two recent Knowledge Knuggets that reviews the “must-haves” for the most up to date EPL coverage available.  This document is also available on the White Papers page.

I have often heard that over 90 cents of every dollar an insurance company pays out is dedicated to defense expense across all professional liability lines.  This may well be an accurate number.

The topic of discussion made me think of one thing in particular: If all of our underwriters know and understand that defense expenses are the major part of loss, and they are within the limits — why do carriers focus on an insured’s assets or revenues as a benchmark for how much insurance is “enough”, or even allowable?

As brokers, we cannot ever say to an insured “you don’t need that much insurance”. But carriers can sure tell us that they don’t want to put up a certain limit.  We have generally accepted the asset level or revenue level benchmark, and the carrier’s argument that they don’t want the policy to be the biggest asset as valid.

Yet in the face of runaway defense costs, and a real issues with consent to settle, reputational harm and copycat suits, is it proper to cap an insured’s limit based on their assets (ostensibly the maximum probable loss that a plaintiff would aim to recover), instead of what it would cost to defend a claim seeking the maximum probable damages?

I was competing for a risk against one of her standard carriers, and I asked her if a certain endorsement was on the policy, and provided some cautionary language about how the endorsement reads.

She and I had a lengthy discussion about the form, and went over it together in detail.  By the end of the conversation she had come to the realization that her underwriter didn’t know what the form said.

When I was on the company side, I noted that most of my co-workers did not read our policy and endorsements.  They had a good grasp of what the form was supposed to do, but had not spent any great deal of time studying the language, let alone comparing it to our competitors’ policies.

When you have a question about coverage that may or may not be in a policy you’re quoting, you may want to make sure the underwriter can point you to the desired language.  If he or she can’t, you may have a situation not unlike my agent’s, where the underwriter is relying upon marketing hype or assumptions and does not truly understand the form.

Underwriters come in all shapes and sizes, just as agents do.  Some are very technical, some are not.  Some are very diligent and educated, some are more inclined to shoot from the hip.  They all serve a purpose, and are all fine people.  But you need to know whether you can rely upon their representations and guidance.

Keep in mind that company underwriters have no E&O exposure and have no obligation to guide you to correct coverage or competitors’ programs if they cannot or will not do what you need!

I’ve been placing coverage for investment advisors, hedge fund managers, broker/dealers, and private equity managers for several years.  I receive many more inquiries than I do orders to bind.

Most frequently, unless they are being required by a client or vendor to carry coverage, the advisor or money manager chooses to forego coverage.  It seems that they perenially believe that nothing will go wrong with the investments into which they put their clients, and that if it does, well hey, they made all the required disclosures, so they can’t/won’t be held liable anyway.

I have two words to say to that:  “defense costs”.

Even if an advisor is blameless, if he or she is sued by irate clientele a defense must be mounted against that suit.  Any disclaimers, all disclosures, and all details about advice given will be dragged into court to determine whether or not they were proper, sufficient, and therefore render the professional blameless in the matter.  Even a successful motion for a summary judgment dismissal can cost thousands and thousands of dollars in legal fees.

When it comes to something like Madoff’s situation, there is no amount of disclosure or disclaimer that will excuse any advisor from pointing his or her client in that direction.  Now, in retrospect, the blatant lack of legitimacy is glaringly apparent.  What possible excuse can an advisor propose for how he or she did not see through the smoke and mirrors?

The good news (for my agents and me) is that some advisors have been sensitized by the recent trials and tribulations in the marketplace and are more aware of the need for coverage.  My hope is that they will come looking for it and will choose to buy now.

Others may feel that with the insurance and financial industry being topsy-turvy they will not be able to get coverage anyway, so why should they try.  They would be incorrect.  Coverage is still available.  It is being more carefully underwritten.  Some classes of business have contracted significantly (can you say “hedge fund”?), and some retentions or premiums will be higher.  The larger the account, the more easily we can find coverage.

So all you advisors and money managers, Come on Down!  We have coverage for you, and perhaps now you can see why you need it.