Changing Times in the Excess Workers' Compensation Market

A group of companies that band together to self-insure their workers' compensation obligations on a mutual joint-and-several basis are referred to as "self insured funds". These funds are required by statute in every state to purchase excess workers' compensation insurance for protection from large losses. This ensures that the medical bills and lost wages arising from catastrophic work-related injuries to employees will be paid. Until recently, buyers for this type of insurance enjoyed a market with lots of competition, low minimum premiums, and low per-occurrence retentions.

Over the last twelve months the market for excess insurance has changed dramatically. Minimum premiums and per-occurrence retentions are increasing for everyone. This puts a strain on the assets of funds due to higher cost and retention of more loss volatility.

Why has the market changed so dramatically?

1. The number of insurance companies writing excess workers' compensation insurance has declined dramatically. In the past there were almost a dozen players in the market. Today there are only about five or six.

2. Medical cost inflation is still growing at a higher rate than the inflation rate of the overall economy. Higher medical costs mean more claims are exceeding the old per-occurrence retentions and costing the excess insurers big bucks.

3. Excess insurers are more selective in the class codes and industries that they will insure. Temporary staffing companies, certain contractor classes and trucking companies are finding it difficult to obtain excess insurance.

4. Less competition means higher premiums and more restrictive policy terms and conditions.

While these changes have created problems for buyers in this market, some of these changes were inevitable. Excess insurers prefer to pay large losses that occur infrequently rather than many smaller losses. By not increasing per occurrence retentions in step with the increase in medical expenses, they saw an increase in loss frequency that became unacceptable over time. Excess insurers ended up picking up most of the medical cost inflation.

As difficult as these market changes are for self insured fund buyers, there are options to consider. One option is to buy what is known as a buffer excess layer which sits below the per occurrence retention of the excess workers' compensation insurance policy. Buffer layer coverage is readily available in the reinsurance market, which is better equipped to assume the frequency and volatility of losses that the excess insurers do not want. Not many fund managers know about this option because the retail broker handling their excess insurance placement often is unfamiliar with what is available in the reinsurance market.

With the purchase of a buffer excess layer, self insured funds get more control of the amount of loss they retain.

Bonus Tip: What To Do Next To Buy Excess Insurance The Right Way

To get the retention you want, you need the help of an adviser with the right expertise and the ability to present the right options.

5 Easy Ways to Making a Successful Home Insurance Claim

If you've taken out insurance and something happens like an accident, fire, theft or flood then the likelihood is you need to make a home insurance claim.

This can be a very worrying time and it is imperative you do this properly, otherwise you could find your claim rejected. This is the last thing you want after paying your premiums for years!

If you need to make an insurance claim then you need to get in touch with your insurance provider ASAP and ask them to post or email you a claim form.

Also, if the claim is of a significant value (usually over £3000) it might be wise to employ the services of a loss assessor. They specialise in helping you get your full entitlement under the terms and conditions of your insurance policy - and they usually work on a small percentage of the settlement, meaning it's in their interests to get you as high a settlement as possible.

When you have received the claim form make sure you fill it in properly and make sure you keep a duplicate for yourself.

Check the following factors before you send in your claim:

1. You're definitely protected for what you're declaring for.
2. You're within the deadline for making a claim.
3. How much the excess is. If you have a high excess, and the claim is small, it may not even be worth making an insurance claim.
4. Check the dreaded small print, and make sure there isn't any criteria that could stop you from claiming (the type of locks etc).
5. Whether it's a new for old plan. The insurance company can deduct for wear and tear, so the amount you get may be less than the cost of replacing them new.

You'll need to include duplicates of all certification that will help your claim, such as invoices and receipts. Be sure to retain copies of these in case your insurance provider turns down your claim.

Sometimes your insurance provider may also ask if you have other policies (such as contents insurance) in place. It is very important you let your provider have these details on any additional cover.

Perhaps the most important piece of advice is not to overstate or embellish your insurance claim. We have seen many instances where this has resulted in a rejected claim, or a reduced settlement.

Do you always have to make an insurance claim?

You don't have to claim on your insurance, even if you're eligible to do so. In some cases, if your claim is relatively small, you may decide not to as your future rates could increase by more than the quantity you have stated.

Important: even if you don't want to declare on your insurance coverage, you must always tell your insurance coverage provider about an incident. If you don't report it, you might discover that this results in problems further down the line.

Dean Foster is an insurance claim expert, and the owner of Foster & Rowe Ltd - the UK's leading Loss Assessor.

After 20 years of working for some of the top loss adjusting companies, we became "poacher turned gamekeeper" and represent the policy holders interests only. We know exactly how your insurance company will try and settle your claim for less than what you are entitled to, and we use our knowledge and experience to get you your highest possible settlement.

Geography, Flood Risks and Distribution Business Insurance

The transport of products and goods and the risks to storage have always been determined by the geography, more specifically the topography, of a particular location.

The physical location in space by businesses involved in the movement of goods, are determined by market factors such as population and demand, such that the physical risk location is usually found at the most appropriate place close to the market and main communication routes, to satisfy this demand.

For example, Warehouses have traditionally been built next to water courses such as rivers or canals to supply hinterlands and regions, or around ports and ocean harbours for shipping imports and exports temporary storage.

After industrialisation railway hubs then became surrounded with storage and shipping facilities for internal regional supply. Often the largest existing town, built on a river, would become the central storage centre.

In more recent years large warehousing and distribution centres have also grown up around airports or near motorway intersections, which both require large flat expanses of land.

Many towns have often grown in response to supplying these warehousing functions and include businesses that rely upon the physical presence of the distributors.

It is these very historical physical locations that the distribution process requires, that are now threatening the availability and costs of business insurance for enterprises such as warehouses, wholesalers and storage facilities, due to the increased frequency of recent extreme weather or geophysical events.

In the UK over 75% of warehouses and industrial centres or parks, are built on river floodplains or coastal locations. These properties are currently at a much higher risk of serious water damage and flooding, on a far more frequent scale, than was previously calculated by underwriters.

Over the last ten years large losses have been suffered by insurance companies that underwrite warehouses close to rivers, the length and breadth of the country.

Since the 2002 Glasgow floods, serious loss to stored goods and transport running into the hundreds of millions of pounds, has occurred at places as diverse as Carlisle, Cumbria, Kent, Somerset, Severn Valley, Tewkesbury, Thames Valley, Sheffield, Northern Ireland, East Yorkshire, North Wales and The Midlands, to name just a few of the larger floods.

This high level of loss and claims has inevitably led to more on site risk assessment surveys before confirming cover, less choice of provider, inflationary premiums and more policy clauses and exclusions to cover.

Dependant businesses who supply or are supplied by the suppliers warehouses locally, have also had the costs of insurance increase, both by perhaps being flooded themselves, or seeing the costs of their business interruption and loss of profits cover increase, due to more claims for failures in the supply chain caused by flooding.

Moving forward, both Insurance policy holders and those providing the cover need to adapt in order to manage and reduce flooding risks and keep policy premiums at a reasonable cost level.

In order to achieve this many insurance companies will now insist on more active risk management. For example, policies may include wordings that all goods stored in an 'at risk' warehouse, must be on water resistance dexion type shelving at a certain height above the maximum expected flood level as determined by the Government hydrological flood risk map. Or that all motor fleets at risk must be moved to safer storage areas on higher ground.

These types of clauses whilst enabling warehouse cover to be issued, have led to increased business costs to implement.

Many properties nationwide are at risk due to the nature of local planning decisions and water management policies. Although the UK Government has committed further spending to flood protection schemes, the impact to date has been small.

Whilst flood risk in the UK, unlike in the USA, has yet to become a fundamental risk controlled by Government, the failure of the UK insurance industry to provide adequate cover for domestics risks such as home insurance for a large and growing proportion of the population, coupled with rising business insurance costs and more frequent extreme weather, may soon force the Government to offer some type of national flood insurance program, alongside its responsibility to manage runoff.

Water Will Find a Way

Water damage claims in Canada now make up 53% of all property insurance losses.*

As a former Insurance Broker I can attest to this statistic and even suggest that if all damage to property were reported & covered, that the number would be even higher. Why this growing trend? This is truly the fault of our own progression & modernization. If you consider that at only 100 years ago almost no one had water running or electricity into their homes, you can understand that damage from water was rare & in turn damage from fire was high. Electrical code (if you did have electricity running to your home) was non-existent & lighting your way by oil lamp & heating your house with firewood in a cast iron stove was the norm.

In this relatively short period of time we have evolved from indoor plumbing being a novelty of the rich to living in homes which in some cases have more bathrooms than bedrooms, appliances that wash our clothes & dishes and Hot water tanks sitting in our basements. This is the new normal. And although our electrical & heating prowess has grown to an art form in terms of safety and security, we haven't yet solved the water puzzle.

I recall years ago as I was navigating the ropes as a first time homeowner, I was wrestling with a leaky garage. Every time it rained the water entered and soaked the floor. My wise neighbor was having a laugh at the many attempts I had made to band aid the situation. I was sure I could avoid what I though was the large bill it would take to properly re mediate the situation. Being a good neighbor he didn't laugh too hard but instead offered the patient insight that I'll always remember; he said to me "Water will find a way". And it did, through every contraption, patch & quick fix I could throw at it.

I was lucky in the end that the water never did come into the house through the garage & after the painful reality of defeat had sunk in, I opened up my wallet and the phone book to call in a professional. I was however not so luck a few years ago when the washing machine malfunctioned a flooded my entire basement in 4 inches of water. I was so busy concerned about water coming in from the outside I never considered I'd get hit from the inside. My neighbors words echoed true: Water had found a way!

It turned out a simple $6 hose had burst and caused $25,000 in damage. (by the way: the cost of the upgraded braided hose I could have bought at the hardware store instead was only $12). Yes, two months and too many headaches later, I was able to rent out my basement again. Not only had I displaced my tenant and had to find a new one, I lost the income from rents, the deductible and my claims-free discount on my insurance policy (not mentioned the hours I spent on the loss salvaging property from the flooded basement).

Now my own personal mini-disaster described above is all too common for building owners of all types. As mentioned above 53% of all property damage claims are coming from water damage of one sort or another. This includes, burst pipes, storm damage, flood, malfunctioning appliances, faulty building envelope construction, sewer back-up losses, the list goes on. As building owners you can understand the potentially devastating effect water damage can have on your investment. Rents stop but bills continue to pile up. Tenants leave & find new premises to rent or lease. The mortgage still needs payments as do the utilities. Consider the even higher costs when the water is from grey & black water sources. Aside from the property damage you now have to consider mold and other airborne pathogens that can contaminate the property and even the air. Surely the solution isn't to knock down every building and reconstruct with today's latest technology in plumbing and water damage prevention. In my case a $12.00 investment would have saved $25,000.

Here's a few loss prevention techniques you can implement in your building maintenance program:

- keep floor drains clear of obstruction; 
- ensure that there is proper grading around your building; 
- install a sump pump; 
- install back flow valves or plugs for drains, toilets and other sewer connections to prevent water from entering the home; 
- for vacant buildings: drain the plumbing & arrange to have someone come in to ensure no signs of leakage has occurred. It is important to keep the heat on to avoid frozen pipes especially in older buildings. 
- check water connections, hoses, pipes for signs of wear and tear.

Now there is no fool-proof way to ensure water damage will never occur. But if it does have on hand contact information for a Restoration Company as well as your insurance broker's phone number. Whether insured or not, it is important for property owners and managers to document damage with photographs or video, and immediately, to begin loss mitigation procedures themselves; or hire a qualified contractor to do this on their behalf. It is totally inappropriate to put off mitigation while waiting for an insurance claims representative to arrive on the scene to evaluate the loss. By that time, in all probability sufficient time will have passed to grow and amplify microorganisms, which may not be covered by insurance. Loss mitigation is defined by insurance policies as "reasonable and prudent measures designed to preserve, protect and secure property from further damage."

We do this because we know "water will find a way."

* Insurance Bureau of Canada (2009 stats cited)

Why Building Insurance Subsidence Cover Is Imperative For Any Property Suffering From Sinking

The worst thing about this type of situation is the fact that you may well have moved into a house in good faith without knowing anything about the problems it either already had or acquired in the future. Fortunately, if this is the situation then you will be able to qualify for special cover, but you may have to agree on a higher rate of excess. This of course depends on a number of different factors but if you are unsure it is better to ask your policy company.

Meanwhile, as policies do tend to vary from provider to provider you will be looking at in the region of around one thousand pounds in order to be fully protected. In this way, if you ever have to actually make a claim on any sinking issues that affect your abode then unfortunately you will be hit with a significant amount of money to pay. Obviously you will need to fork out relatively quickly and you should also be aware that, if your home has a much greater level of landslip or sinking, you will often have no other alternative but to pay the premium - however, remember that the costs of repair will be much more!

Ultimately, it's far better to be safe than sorry - it's a mantra that has got plenty of people out of sticky situations in the past and it will serve you as well. Before you buy a property, it might be worth having someone carry out a survey on it in order to ensure that it doesn't have any problems that might come back to bite you in the future. If you currently own a home that has landslip then you need to make sure that you enquire about the right building insurance subsidence protection. In spite of the cost, having the right protection is definitely the way to go - ensure you do it well in advance of buying your home or buy it straight away if something goes awry. You don't want to wake up one day in the bowels of the earth - it's not a particularly hospitable environment!

At present, you have the chance to choose from a wide variety of companies on the web who will be able to provide this type of cover as well as historic home insurance. For historic home insurance, this could affect anyone who may own a stately property or a listed building or even castle. This is important if you are part of a group or organisation (such as the National Trust) which looks after stately homes or historical buildings. Some companies can tailor the specific requirements of the policy according to your needs so it is best to enquire. This type of insurance might also be applicable to the likes of museums and galleries who will often be listed buildings and have various historical artefacts and valuable items contained within them.

If you are looking for a one stop solution to all your insurance needs, an online insurance quotation provider is what you need. Hard to Insure is one of the leading insurance quotes provider. Get quotes for flood insurance, JCT insurance, listed building insurance etc.