Archive for February, 2012
Is it time for a terminology change?
By Ken Kukral
With the litigious society in the United States, there have been terminology changes in the insurance business to better reflect the intent of coverage. A good example of this was the change from the term “All Risk” Property Coverage to “Special Form”. This was done to reduce the confusion with clients that not all risks were covered under this policy. There are numerous exclusions that reduce or eliminate coverage.
One of the areas that I believe is in need of a terminology change is the term “Umbrella Policy”. The confusion that is created by this term is that this policy provides an “umbrella” for other liability exposures the client may have. The reality is that there are very few (if any) “true umbrella” policies being offered. What clients really have is a “follow form excess liability policy”. So if they have coverage under their primary policy, they have higher limits for ONLY those coverage areas in the excess policy. There would not be a “drop down” if there was a claim that is not included in the primary coverage or if the primary insurer became insolvent.
So what term should you use with your clients? I would use the “follow form excess” term so they get the idea that all you are offering them is higher limits of coverage they have in their primary insurance program. It is important to list all policies in the follow form excess liability since they will only have higher limits for what you have listed in the schedule of underlying policies. Don’t forget employers liability (something that happens more for Ohio accounts since this is a monopolistic state and we might only be writing WC in other states on an if any basis). It is important to note that some carriers include hired & non-owned in the excess automatically (when there is underlying coverage) and some force you to list it in the underlying schedule.
One other note, check your exclusions in your follow form excess liability since they will reduce coverage that might be in the primary policy.
Us old timers need to be conscious of the changes in terminology so that clients do not get the wrong impression. When we use terms that give the impression that the coverage is more “all inclusive”, we risk an E&O claim. Details matter….
How do I start a conversation with my clients about cyber liability?
By Ken Kukral
One of the toughest conversations to have with a client is the conversation where you are trying to get them to consider a coverage they haven’t had before. The clients first thought is that if I haven’t needed it before, why should I buy it now? Or they think you are just trying to sell them more “stuff”. They probably already feel they are “insurance poor” and why should they spend more of their hard earned money on insurance.
The “new insurance” conversation for cyber liability is one you need to have with your clients. Both first party coverage and third party coverage should be discussed. While newer (in relative terms to my 26 years in the business) coverage such as EPLI has become pretty much standardized with only a few “bells and whistles” to differentiate the different policies, cyber liability is a wide open area. It is tough to do side by side comparisons since many of the carriers use different language, have different names for each of the coverage parts and have are very specific in their exclusions. All this can make your head spin, so what are you to do?
Well, my recommendation is to approach this “new coverage” discussion with your client in the following manner:
1. Familiarize yourself with the coverage. You do not need to be an expert to be able to sell this coverage.
2. Set up a checklist of questions to ask your client to assess their exposure to “cyber liability”. It is hard to “sell them” if you don’t have a good handle on what their exposures are.
3. Probe on what they feel their exposures are or what areas cause them to lose sleep. These are probably the most important pieces of information you need to gather. It will also help when approaching carriers to tailor the coverage to fit the client’s needs. You can better explore the “bells and whistles” of the different cyber liability programs in line with what the “hot buttons” are for your client.
4. Make sure you keep the discussion with your client at their appropriate technology understanding level. It will be very different when you are dealing with a technology savvy IT Manager versus a more paper and pencil CEO. Start to get too technical with a technologically illiterate person will only make their eyes glaze over.
5. Be prepared to discuss some of the regulations that they are required to be in compliance with. Some of these include the Red Flag Rule, Industry specific privacy regulations, state specific notification regulations and data breach regulations. Also discuss the trust their clients put in them to make sure their information is secure. For positions such as accountants, lawyers and insurance agents the “trust factor” standard is even higher. This coverage is there to help them recover from these type of information disasters.
6. You need to commandeer the application through the organization to get the appropriate person to talk to in order to get the information needed. This may include the CFO, IT Manager and Network Manager. Leaving an application for them to fill out will not work in this situation. Give them a deadline when you would like to have it back…. Since I am sure they are busy people.
7. When selecting markets to approach, try to find the one that best fits your client. Some programs are geared towards specific industries and have been tailored to fit their exposures. At max, you may want to approach 2 or 3 markets. Any more than that and you will have trouble comparing the options since they are numerous. Ideally you want to present one recommendation. More than that and you will have to be able to explain the differences between the two programs to the client and some of those differences can be minute and very technical.
8. Be able to give some loss examples for each of the coverage parts. You may want to give one loss example that spans over a number of coverage sections and show the potential costs that can add up in these kind of losses. If possible find a loss in their specific industry. This will help it to hit home.
9. Close. If you have done a good job of uncovering their exposures, the type of losses they can have and how this coverage could save their business from financial ruin, they should be ready to buy.
Don’t wait, if you don’t talk to your clients about this coverage, someone else will or they will read about it. If you are looking out for their best interests, you need to discuss this valuable coverage with them.
Deadlines are the Devil… or are they?
By Jen Monroe
I was reflecting on the topic of productivity the other day, mostly thinking about all of the different ways our environment affects it. From birth, I was a “night owl” so it was no surprise that I had my most productive and creative moments late in the evening and early morning. In college, I found that I did my best work at night. I went to school for art, and earned a creative degree so being “in the zone” is very important when it comes to my work. In the art world, a studio would completely transform at night, from “class mode” to an open, creative environment. In this space, I could free my mind, get into my work, and occasionally stop to collaborate with others. Thanks to this environment, I was never afraid of a solid deadline— the more pressure that was put on me; the more I would arise to the occasion.
Being a creative in the insurance world is a dramatic change of pace compared to the easy going environment art school creates. Working a 9-5 position instead of staying up all night to finish off a project has changed me in ways I never thought possible! For instance—I can officially say I am a morning person. Who would have thought right? In the way of getting “in the zone” it is much more difficult. There are constant interruptions—between emails, phone calls, and everyday marketing needs from my fellow employees I rarely get the opportunity to be in a creative state of mind. Over the years, I have had to adjust to this environment change… somehow I make it work. The one constant between my college days and my insurance days is that everything I work on has a solid deadline.
I’ve learned instead of buckling under the pressure of a deadline, to embrace it. It’s what keeps my creativity flowing, and ignites my will to push through obstacles without a problem. I know some people become less productive or overwhelmed because of the stress, personally, I say bring it on! (Does this make me a glutton for punishment? Lol)