Introduction: This article addresses how an A/E insurance agent used SmartRisk's SR Risk Assessment for clients with claims to improve their insurance position.
Options When A/E’s Have Claims
Pamela S. Adams, CIC, CRM, CPCU
As an insurance broker that specializes in providing protection to design professionals, it’s rare that I work with a firm that does not have some type of Professional Liability (PL) claim against them in the recent past. Many of my clients have more than one claim pending, primarily due to the fact that A/E firms are sought after in this tough economy, and are often viewed as the deep pocket and their PL policy a recovery asset.
For firms with claims, insurance options change dramatically with significant increases in premium and fewer carriers willing to offer terms. To make matters worse, many A/E firms have seen a drastic reduction in their annual revenue, making reducing operational expenditures a priority.
These are challenging situations for both the firm and broker, and you explore insurance options for your client by explaining the situation to underwriters in an effort to obtain the best possible terms. However, you are limited based on carriers’ underwriting appetite and strategy leaving few options. In many cases the current carrier is the only one willing to offers terms, typically at a significant increase in premium with a higher deductible.
In order to find additional options for our clients with a claim history, we searched for an independent method of evaluating risk management practices including methods for minimizing future risk – and found SmartRisk, a risk and performance management consultancy for design and building professionals. SmartRisk conducts SR Risk Assessments evaluating risk and liability exposures at the operational level. The process is comprehensive analyzing business practices, operations and risk management strategies, and includes interviews with Principals and key personnel.
Firms receive a personalized SR Risk Assessment Report with associated risk-ratings (low-moderate-high) by category developing the firm’s overall SR Risk-Rating. The report is then reviewed identifying program strengths, areas of possible concern, and firm specific recommendations based on best practices for mitigating risk and liability exposure.
One A/E client with recent claims was declined coverage by several carriers. An SR Risk Assessment was performed with their professional liability (PL) insurance renewal approaching. Carriers that previously declined offering terms were now interested. Premiums received were 10% - 25% below the firm’s expiring premium, creating a significant savings for the firm. One carrier also offered a $5,000 credit that could be used to support future risk management efforts.
A/E firms and brokers, you do have options if there have been claims. In addition to the application and loss runs, a risk assessment is a valuable tool that tells a more in-depth story that helps lower insurance costs. Insurance carriers support an independent analysis and are willing to offer better terms and insurance premiums, including cost-sharing and premiums credits for firms participating in the risk assessment. It increases insurance options for my clients and I strongly support and recommend its use.
Thank you,
Pamela S. Adams, CIC, CRM, CPCU
ISU Insurance Services of Colorado, Inc.
Denver, CO
www.isuinsurance.com
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