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Evaluating Insurance Needs, Trends & Costs

Evaluating Insurance Needs, Trends & Costs. August 29 th 2012 . Overview. Industry Climate - Insurance. Industry coming out of “soft” market Typically begins in surplus lines arena, then trickles over to standard marketplace

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Evaluating Insurance Needs, Trends & Costs

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  1. Evaluating Insurance Needs, Trends & Costs August 29th 2012

  2. Overview

  3. Industry Climate - Insurance • Industry coming out of “soft” market • Typically begins in surplus lines arena, then trickles over to standard marketplace • Factors for “hardening” trend include natural disasters, poor investment returns, claims experience

  4. Industry Climate - Heavy Construction • Companies running lean • Top talent and equipment retained (varies) • Liquidation of equipment/downsizing of staff • Acquisitions/Mergers • Diversification of projects/expansion into new sectors (oil & gas e.g.)

  5. First of all - What am I paying for? • What are the key factors in the cost calculation? • What you do • Where you do it • How much of it you do • How well you’ve been doing it! • How much “stuff” you have • Let’s drill down to some specifics by line of business

  6. What effects my Insurance? Commercial General Liability Answer: What you do, how much you do it, and where you do it • Coverage gaps to watch out for: • Mobile equipment • Riggers liability • Reinstating per project aggregates • Factors for best rate consideration • Certified and/or seasoned personnel • Regularly maintained equipment • Utilization of favorable contract provisions

  7. What effects my Insurance? Commercial Auto Liability Answer: Where you are, how far you go from where you are & who’s driving? • Coverage gaps to watch out for: • Not many • Factors for best rate consideration: • CSA/SMS data • Says a lot, could be right or wrong though • Motor vehicle records!

  8. What effects my Insurance? Inland Marine/Property Answer: How much “stuff” you have, where you have it • Coverage gaps to watch out for: • Undervalued Equipment- Cost to replace • Down time if a loss occurs- Business Income • Factors for best rate consideration: • 3rd party equipment inspections • Operator Certification-NCCCO

  9. Get Involved-Risk Participation • First step - Assess your risk tolerance • Partner with your agent to review claims history • Determine claims frequency & financial range • Next step – select from two options based on the size of your company • Deductibles • Self-Insured Retentions (SIR’s)

  10. Get Involved - Deductible Example • Average Auto Policy for Heavy Construction • Frequency: 12 claims per year • Average incurred payment per claim is $8,500 • 2 claims in excess of $9,000 • Recommend Deductible Level: $10,000 • How does this benefit me? • Annual cost of insurance • At renewal time

  11. What can my Insurance do for me? • A provider for a specialized industry with high severity potential must be equally specialized. Service offerings include: • Comprehensive safety program review or new program implementation • Full-time risk management team provides contract review services • Accident checklists, put you in most favorable position possible in the event of a loss

  12. 2012/2013 Industry Forecast • Revenue projections are trending upwards • Many companies are resource short as a result of downturn, scrambling for personnel and equipment to accommodate demand • When things start moving fast, things tend to run loose-”Slow is fast, spraying is prayin’” • Early results: more accidents

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