From The Editor's Desk: Make Sure Your Insurance Company Is Financially Sound
I recently spoke with Allen Bradley, the CEO and President
of Amerisafe Inc., a provider of high hazard workers compensation insurance.
With approximately 40 percent of its business in the construction industry,
including more than 8 percentage points of premium from roofing contractors,
Amerisafe has seen the economic downturn take its toll on its clients.
I recently spoke with Allen Bradley, the CEO and President of Amerisafe Inc., a provider of high hazard workers compensation insurance. With approximately 40 percent of its business in the construction industry, including more than 8 percentage points of premium from roofing contractors, Amerisafe has seen the economic downturn take its toll on its clients. Yet, with every challenge comes an opportunity, according to Bradley. “While the market is tough and a number of roofing contractors may not be able to survive the downturn, I believe there will be consolidation in the industry which will provide opportunity to some contractors,” he said. “While the overall universe of business activity will contract, those who have planned well could actually expand by increasing their market share.”
The country’s economic problems have negatively impacted the insurance industry as well. According to Bradley, the bottom line for contractors is that the insurance industry’s future investment income has shrunk, and now the industry is refocusing on making an underwriting profit, so premiums will rise.
“These rate increases will not be uniform from state to state, by class codes or individual contractor, but one can anticipate fewer insurers offering coverage and rates trending upward,” Bradley said. “Contractors with a good loss history and with a demonstrated commitment to a safe workplace will be the big winners in the marketplace. These are the contractors I believe will not only survive but may actually thrive in the coming market.” Others may not fare as well, according to Bradley.
Bradley offered some advice for roofing contractors: “First, talk to your agent and develop a plan for your insurance program. Agents can explain your options and provide you with a list of alternatives to renewing your insurance program as it exists today. Working with your agent, develop a plan for approaching the insurance market. Typically, businesses try to bundle their coverages with one insurer. Consider unbundling those coverages as an alternative to see if costs can be reduced.”
Another option involves increasing a deductible or retention level. “Increasing one’s deductible can significantly reduce one’s insurance costs,” Bradley noted. “The most expensive portion of your coverage is the lower layer. So, you might consider increasing your portion of the risk and keeping the higher limits to protect the business from a catastrophic event.”
For contractors that have had a significant loss, make sure that post-accident remediation has been undertaken. Bradley believes that most insurers are favorably impressed when an insured undertakes corrective action. “Insurers who understand your industry and business operations will appreciate your efforts to correct a deficiency,” he said. “Cutting back on safety measures is a false economy,” Bradley said. “Remember that insured losses are only a portion of the financial impact on a business. Insured losses are only the tip of the financial impact iceberg - additional costs to productivity, efficiency and management effort. These hidden costs are usually more expensive than the insured losses.”
Make sure prospective insurers handle claims effectively, Bradley advised. Find out about insurers claims operations. Poorly handled claims can cost you money for years to come in terms of bad loss history. “At Amerisafe, we don’t believe claims are like wine - they don’t get better with time. For that reason, we handle our claims face to face with our claims professionals instructed to interview the claimant within 48 hours of our notice of a serious injury. The fair and speedy resolution of a claim is the best result for everyone.”
Finally, make sure your insurer is financially secure, urged Bradley. “Workers compensation claims, for example, can go on for 10 or 15 years; you want to make sure your carrier is around to pay the bills.”
I recently spoke with Allen Bradley, the CEO and President of Amerisafe Inc., a provider of high hazard workers compensation insurance. With approximately 40 percent of its business in the construction industry, including more than 8 percentage points of premium from roofing contractors, Amerisafe has seen the economic downturn take its toll on its clients. Yet, with every challenge comes an opportunity, according to Bradley. “While the market is tough and a number of roofing contractors may not be able to survive the downturn, I believe there will be consolidation in the industry which will provide opportunity to some contractors,” he said. “While the overall universe of business activity will contract, those who have planned well could actually expand by increasing their market share.”
The country’s economic problems have negatively impacted the insurance industry as well. According to Bradley, the bottom line for contractors is that the insurance industry’s future investment income has shrunk, and now the industry is refocusing on making an underwriting profit, so premiums will rise.
“These rate increases will not be uniform from state to state, by class codes or individual contractor, but one can anticipate fewer insurers offering coverage and rates trending upward,” Bradley said. “Contractors with a good loss history and with a demonstrated commitment to a safe workplace will be the big winners in the marketplace. These are the contractors I believe will not only survive but may actually thrive in the coming market.” Others may not fare as well, according to Bradley.
Bradley offered some advice for roofing contractors: “First, talk to your agent and develop a plan for your insurance program. Agents can explain your options and provide you with a list of alternatives to renewing your insurance program as it exists today. Working with your agent, develop a plan for approaching the insurance market. Typically, businesses try to bundle their coverages with one insurer. Consider unbundling those coverages as an alternative to see if costs can be reduced.”
Another option involves increasing a deductible or retention level. “Increasing one’s deductible can significantly reduce one’s insurance costs,” Bradley noted. “The most expensive portion of your coverage is the lower layer. So, you might consider increasing your portion of the risk and keeping the higher limits to protect the business from a catastrophic event.”
For contractors that have had a significant loss, make sure that post-accident remediation has been undertaken. Bradley believes that most insurers are favorably impressed when an insured undertakes corrective action. “Insurers who understand your industry and business operations will appreciate your efforts to correct a deficiency,” he said. “Cutting back on safety measures is a false economy,” Bradley said. “Remember that insured losses are only a portion of the financial impact on a business. Insured losses are only the tip of the financial impact iceberg - additional costs to productivity, efficiency and management effort. These hidden costs are usually more expensive than the insured losses.”
Make sure prospective insurers handle claims effectively, Bradley advised. Find out about insurers claims operations. Poorly handled claims can cost you money for years to come in terms of bad loss history. “At Amerisafe, we don’t believe claims are like wine - they don’t get better with time. For that reason, we handle our claims face to face with our claims professionals instructed to interview the claimant within 48 hours of our notice of a serious injury. The fair and speedy resolution of a claim is the best result for everyone.”
Finally, make sure your insurer is financially secure, urged Bradley. “Workers compensation claims, for example, can go on for 10 or 15 years; you want to make sure your carrier is around to pay the bills.”
