The Wildest Insurance Fraud Scheme Texas Has Ever Seen: https://www.texasmonthly.com/articles/it-was-never-enough/
I guess everything *is* bigger in Texas. (RIMSHOT)
The Wildest Insurance Fraud Scheme Texas Has Ever Seen: https://www.texasmonthly.com/articles/it-was-never-enough/
I guess everything *is* bigger in Texas. (RIMSHOT)
This will be a bit more abstract of a topic than usual, but it is no less important.
One of the greatest challenges of broker-dom is knowledge. Being an insurance broker is, after all, a professional service. Certainly we have physical “products” in the form of policies but mostly what we are selling is ourselves, our knowledge, and our service.
Because there is so much that goes into writing insurance coverage it is absolutely vital that every organization have an information sharing procedure. But I hesitate to use that word – procedure – because I often find the process is over formalized. Straight truth time: how many formal “monthly meetings” have you been in – not that you’ve lead – where you’ve felt engaged, where you’ve wanted to participate, and where the meeting went over because everyone was so invested in the topic? I’m guessing very few (and if not please let me know your secrets!).
But because education is not just an organization disseminating information from point A to point B, excitement and participation are crucial to your organization’s learning ability. A traditional “meeting” format is perfect for disseminating information but it’s very poor for creating new information. And new information – about what needs to be addressed, how current obstacles already are addressed, about what client requests are coming in – is exactly what you need to foster an organic, positive learning environment.
I suggest every organization encourage staff to create their own learning sessions among themselves. This allows them to choose times that are convenient, topics that are relevant, and participants that are engaged. Some of the best knowledge I have gained is through simple 4 person meetings where we were all excited to bring some new quirk of our job to show everyone.
It’s also through this “ground-up” method that you’ll find out individuals predilections – who is excited about what aspects of problem solving? Who is good at finding relevant information to a question that was posed? Who is adept at creating deliverables to enhance this new-found knowledge? You will get drastically more input from a handful of engaged people than you will with an entire team, even if you mandate “everyone bring one topic of discussion”. That’s old thinking – get that out of here!
Once these “mini-sessions” take off you’ll find them an incredible resource for more traditional organization-wide needs. After all, if there’s a hot topic among the mini teams there’s a good chance it’ll be important elsewhere. I can’t tell you the number of topics that have arisen in one of these small “learning sessions” that showed a need for organization-wide education.
One of the coolest aspects of these sessions is getting to know everyone’s passion. Everything in your organization – absolutely everything – is complex when you look at the details. There is no small job – just big people who think jobs are small. So when you start running learning sessions like this you’ll get a massive amount of insight and expertise you never knew you needed. Everything from how to save a few computer clicks for a task that’s performed 2,000 times a day, to better ways to send information between teams, to how to make invoices look cleaner, to… all sorts of topics you never knew you needed because the “top down” approach simply doesn’t allow it.
In short, every single person in your organization is a thought leader and it takes creativity to tap that. These individuals are mired in day to day work and often don’t have the opportunity to voice their opinion in an appropriate setting – and a “team wide meeting” is not an appropriate setting. People need to be able to be open and honest, and be able to talk to their peers rather than someone who controls their vacation days. It’s only through empowerment of the individual, organically, can you start to see what needs there are to address.
Finally, it is incredibly important to memorialize all of this. Having a good info-sharing plan in your organization isn’t enough because once those people leave, their info is gone as well. This is where the more traditional process takes place – have your learning session teams write down notes and topics of discussion. It doesn’t need to be anything serious – really just what people brought up and how it was addressed; think of it like meeting “minutes”. These can then be reviewed for commonality.
If you want to take it a step further, there are so many technology tools to help you. Everything from message boards, to knowledge bases, to Wikis. Heck, if someone wants to let them send out a newsletter to team members with topics or circumstances they find particularly interesting.
Many organizations tend to look at “education” and internal info as a very straightforward process. But brokers deal in ambiguity every day. And even when we’re dealing with literal policy contract language, every exception has a caveat has a circumstance where it doesn’t apply. A good broker is good because of how they deal with that complexity and ambiguity. If you’re not innovating your education methods you’re doing yourselves, and your clients, a disservice.
This one comes from personal experience (and you know who you are if you’re reading this!).
General Liability is, obviously, not intended to cover incidents that are intentionally done with knowledge they will cause harm. But there is an exception to this: coverage applies if you knowingly cause injury in effort to otherwise preserve persons or property. Here is the (very brief) exclusion and exception from the 2013 CGL:
a. Expected Or Intended Injury “Bodily injury” or “property damage” expected or intended from the standpoint of the insured. This exclusion does not apply to “bodily injury” resulting from the use of reasonable force to protect persons or property.
The real-world example I was provided for something of this nature is a crane operator who has to drop a load to prevent a catastrophic failure. If they intentionally drop a load, and that injures someone, the CGL will provide coverage if that action was taken to prevent a larger event occurring.
As a side note, there is a bevy of case law regarding this “expected or intended” exclusion and how it applies, whether the language is ambiguous, and whether coverage hinges on the intention of the act or the intention of the damage. It’s definitely worth looking into.
However, for our purposes, what I wanted to discuss is what is not in the exclusion: specifically you will note the exception provides coverage only for “Bodily Injury”, which is only 1/2 of the CGL’s BI & PD coverage. I.e., the unendorsed CGL does not cover expected or intended Property Damage; only BI.
In the example of a crane operator dropping a load you can see how this could be incredibly problematic: you are almost assured to cause property damage in such a case. But, going by the strict “4 corners” of the policy, you’re not going to be covered for such even if your intent was to prevent a much large instance of property damage.
Thankfully, some carriers do offer proprietary wording to add this back, and such is even included on “enhancement” endorsements among even the smaller/mutual carriers of the world. However, even some national carrier brands don’t address this in their policy and, when I brought this to them, they were flummoxed how to respond. My key partners asked for language I could provide them (and this particular one eventually manuscripted!), while others essentially shrugged.
In the end this is an incredibly easy fix for a carrier – it literally takes adding only three words to the exception (“or Property Damage”). The fact that it does need to be manually added can be troublesome – it’s going to need approval. While troublesome, and likely frustrating to carrier personnel, it’s precisely these type of esoteric situations by which brokers live and die. A client can go to nearly any broker/carrier and get an unendorsed ISO policy; if you’re not giving them a reason not to then that’s precisely what’s going to happen.
Below are the “First Steps” I personally take when attempting to understand and present an account. These are not concrete in any fashion but simply methods I’ve developed and which have received positive feedback. If you can be an expert on your own clients then you can present them much more holistically to your carriers, and any sort of give-and-take will be far, far easier because of it.
Create a Profile
Without exception, every single one of you clients should have a profile. Think of these as “sell sheets” – they are the highlights of your client and provide a basic overview of history and operations.
Profiles will be the first thing most carriers review and, as such, help to frame the discussion. Think of it this way: if you were to simply rely on ACORDs for information you would know very little about an actual company and anything that “stood out” to you, say seeing an extra heavy fleet, will do so in the worst possible way. You would start to ask yourself why they’re on there, think about the huge risk associated with extra heavy units rather than PPT, etc.
You do this because you’re an insurance person and you’re supposed to go off on mental tangents like that. After all, our job is to anticipate the unexpected as best we can and protect our clients from it. But you absolutely do not want a carrier making their own assumptions about what is and is going on.
In essence, the more open ended questions you leave your carrier partner with the more they’re going to assume negatively in your favor. After all they have a limited time frame in the day just like you, so why would you make it hard for them to find relevant information, especially when it’s on something that may be concerning with appetite or capacity.
Profiles are an introduction and, if done right, allow the entire process to proceed with much less resistance and stumbling. It puts both you and your carrier partner on the same page – literally (see what I did there?).
At the very least, these profiles should contain:
I cannot tell you the number of times simply going through this process has produced new information for me – whether it’s finding a new corporate entity, or finding one that has shut down, or getting details on a service offered I never knew about.
Consider the profile a little research project and treat it accordingly – because any carrier partner is going to do the same thing and you do not want to be the one learning new information about your client when you discuss policy terms.
Review Legal Sources, Review Ownership, Review JVs, and Make an Org Chart
Related to the Profile but important enough that it bears repeating: look up all entities your client has. Domestically, nearly every state will provide you with free access to the Secretary of State business register website where you can search by name, sometimes owner, etc. The number of entities you will find will astound you – I have even had the pleasure of telling the client about an entity that was opened up in their name.
On the flip side, always, always, always ask about Joint Ventures. These often will not show up in searches since they will be under different names, or ownership will be in the name of an executive and not the company. Especially in certain industries (looking at you, construction) JVs are incredibly common and set up almost without thought. However, when it comes to insurance programs, consequences can be dire if you don’t have it set up correctly.
Finally, you need to review ownership – especially if your client has JVs. Never think that something is a subsidiary until you see the stock holdings. Often you will be told something is a subsidiary when it’s really a sister company. And to the client it is – if Martha owns both 100% of Company A and Company B, she basically considers them subsidiaries. However, from an insurance standpoint, they are separate – you will not get “automatic” coverage for one simply because you insure the other.
Get DETAILS on the Operations
The number of industry people I’ve met who know nothing about their client beyond “oh they’re an XYZ maker” is astounding. If someone makes wood products do they also have tree farms or storage areas? Do they take in recycled or treated wood? What machinery do they use and is it a fire or personnel hazard? If someone is a medical office do they use third parties, such as overseas radiologists? Do they moonlight anywhere? If your client is in construction do they also design? Etc. Etc.
Your client is the best source of information for them, so as you’re getting the “basics” down for your profile make a list of questions you have – what kind of equipment is used? What’s your territory of operations? Do you sell overseas?
A great place to review what might be asked are the applications that are ultimately going to need completed anyway. So take a look at those and see what carriers want to know about and then go even a step further. This is because if an application asks “Do you perform XYZ” the question is likely there because of appetite or coverage reasons. So if you get that information beforehand you’re in a much better position than trying to figure it out 2 weeks after you sent in an application and 3 days before you need the quote.
Review Safety Programs
Every client of decent size will (or should) have a safety program. While not all industries will be as critical of these, it’s incredible information to have and to provide with an application even if it’s not specifically asked for. Being able to show a dedicated, robust safety program up front will help allay concerns should they arise later.
If your client requires all your employees to get a certain certification state it loud and proud! If they won awards, provide magazine articles showing such! If they work with very large national/international partners say that as well – those entities have the luxury of being judicious regarding who they use and it’s a definite star on your record if you are in such a trusted network.
Review Claims, Loss Picks, Details/Response
This topic is incredibly important because it’s likely the part your direct carrier partner (underwriter) has the least control over. If someone picks out at $X then it’s hard to bargain around that.
However, what you can do is review everything yourself first. Get 5-10 year loss runs and run a loss pick. For any significantly sized claims get details and, just as importantly, get responses your client made to their operations to prevent that from happening.
This is because anything of concern in claims is going to get kicked upstairs and you’re going to have near-zero influence on it. But what you can do is get all the information beforehand and present a compelling case to your direct partner (underwriter) then *they* will have the tools to advocate on your behalf. This underwriter, and their direct reports, will be the ones interfacing with whichever division is able to make an exception. So if you leave them hanging with imperfect information then you’re sabotaging your own efforts.
Anticipate and Provide
A few years into the insurance service game and you should know what is generally required of each client and/or carrier. It’s crazy to think that though we are busy all the time, we actually only “work” on a submission for a very short period of time, just at multiple intervals.
Your carriers work the same way – they want to pick up a file and complete it. If they can’t it gets put back down and you either get to wait another week or you get a 10 word e-mail with a single question. Then another. Then one asking for a copy of financials. Then, then, then….
You can save literal days or weeks off of processing time by eliminating as much of this back and forth as possible – and your carriers will love you for that. Can you imagine the feeling you’d have if you got a piece of new business that had a full copy of all policies, endorsements, applications, and currently valued loss runs – rather than the misspelled name of the business on a cocktail napkin we usually get? You’d be ecstatic – you’d be able to work on that start to finish.
Again, carriers want that to. So if you can anticipate needs – even going so far as to securing supplementals which “may not” be needed but are nice to have – it will make your relationship, and the potential outcome for your client, so much better.
You may look at this and say this is way more work than you’re doing when (e.g.) a piece of new business comes up. And you’re probably right. But I have found that these efforts save so much more time in the future and, in fact, things like the profile become a personal reference for me; I can literally open them up and copy/paste an org chart to someone rather than trying to make one from scratch via 12 screens in a management system.
But caveat emptor: these are things I do personally and they may not transfer to others. But whatever you end up doing I would suggest you track how your carrier partners respond because, ultimately, if they are happy with your work then they will be much better and able to respond to your coverage asks.