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.”