| There is no such
thing as “apples to apples”
One of the
problems most corporations face when they take their
insurance to market is the fact that there is never a
true apple to apples comparison.
Most
of the time, the only apple to apples thing that is
compared is the limit of liability, but in the insurance
world, there are forms that are not standardized. Many
times these lack of standardized forms go unnoticed, and
so an insurance company will earn an account, or better
yet, a corporation will hire a new company for a savings
not ever realizing that they just lost an amazing amount
of coverage.
Example...
Recently our firm was hired to manage the renewal
process for a large construction firm. Our role was
included creating bid specifications for each agency to
follow and review the proposals once received doing a
true comparison of the forms, carrier stability, and
exclusions applicable to each line of coverage.
During
this review, we uncovered the fact that their $10M
umbrella did not include coverage for their error and
omissions coverage.
This
fact was hidden in the language. It was hard to find,
and I'm sure the agent did not intentionally mislead the
client. However, the fact was that, the client, who
thought they had $11,000,000 worth of liability
protection, only had $1,000,000.
It is
key to point out that this contractor had a large design
exposure.
In
addition, we were able to help the client understand
that in one state of operation, they had an unlimited
liability due to their participation in buyers group.
Although they had been saving about $25,000 a year in
workers compensation cost, they had no limit on the
amount of an assessment they would have to pay in the
event the group went insolvent.
It is
situations like these that warrant the need for a risk
management consultant when procuring multiple quotes for
your annual insurance coverage.
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