A New Twist to Under-Deductible Claims
Is it a claim if nothing is ever paid? Should the carrier consider an incident under the deductible in making an underwriting decision? Many companies insist they have the right to know about all incidents that would be covered, even those under the deductible. Consumer advocates disagree. The issue has become so controversial that some insurance commissioners are issuing administrative rules banning the process.
This week I ran into a twist on the issue. A significant commercial account submitted their first products liability claim on a policy which contained a $500,000 deductible. In handling the claim, the carrier learned there had been other incidents, under the deductible, while the account was insured with the previous carrier. None of those incidents had been mentioned on the application because the insured had paid the claims themselves. Now the company does not want to pay the large claim stating that they were not given complete and accurate information for underwriting. Should the insured have disclosed those incidents that they paid themselves? Were these incidents an important factor in the underwriting decision? Well, remember the old adage, Frequency Breeds Severity? If the insured has enough small, retained claims, it is just a matter of time before they have one significant enough to call in the company. Perhaps it is wise to remember another old adage: When in doubt, check it out!
Tiger Update
Now that most of his sponsors have distanced themselves from Tiger Woods, perhaps a new opportunity for him is opening up in the insurance industry. The New York-based insurance broker, DeWitt Stern, has developed a new product called Reputation Risk Insurance. The policy will “protect brands, corporate entities and advertisers against losses incurred from reputational crisis.” It compensates policyholders for both the cost of crisis remediation and the actual loss of revenue following a public relations crisis. Those companies that use celebrity endorsements in their advertising have long insured the spokesperson for death and disability. That is no longer enough in a society that insists on a pound of flesh from anyone in the spotlight who stumbles. Let the Suits Begin
Many agents in the frozen tundra yawn at the mention of Chinese drywall, thinking it is strictly an issue in those warmer climes of Florida and Louisiana. However, a federal lawsuit filed against a defunct builder tells a different story. The suit is on behalf of over 700 Florida homeowners who are seeking indemnification for their losses from the builder’s insurance which has limits of $200 million. The suit names 14 insurance companies, including those that participated in the reinsurance. The list includes carriers many agents will recognize including Lexington, Scottsdale, Amerisure, and Auto-Owners. Chinese drywall is not just a problem in the South; it has been found in over 30 states. It is problem that could have an impact on some of the companies Midwest agents use on a regular basis.
The Value of an Agent
I met the Geico gecko in a strip mall on the outskirts of Sarasota. The company, whose theme has been “dump your agent and save 15%,” is adding agents in select locations. And, they are not the only company that headed in that direction. The auto insurance that AARP has offered direct for years has recently been made available through select Hartford agents. And, despite the public affair Progressive is having with Flo on national TV, the company has not yet found a way say good bye to their agents. Maybe an agent does add value to the insurance transaction after all? We certainly believe so.
And the Winners Are . . .
In 2010, the Van Wyhe Group is giving away free CE to three lucky agents each month. Each winner will receive 12 credits which can be used for seminar, on-line, or self-study CE. Winners will be announced each month in this newsletter and should contact Angela at angela@insurancece.com to redeem their winnings. To win, you must be signed up for this newsletter. Spread the word.
This month’s winners are:
Jeffrey Servinski of Bailey Agnecy in Midland, MI
Kristin Mohr of BWO Ins. Group in Elkhorn, WI
Dawn Prus of Prus Insurance Agency in Canfield, OH
Quote of the Month:
"If everything seems under control, you're just not going fast enough."
- Mario AndrettiWho We Are:
InsuranceCe is brought to you by The Van Wyhe Group, an education firm coaching agents in ways to add value to the insurance transaction. Agents who master adding value attract business rather than chase it. | February's 50% CourseCase Studies in
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