IAQA Presentation 2012
- 1. Insurance Issues for IAQA Members – What You Really Need To Know To Protect Your Company, Employees, and Customers Presented By: Richard W. Shaw, Jr., CPCU, ARM Vice President – CBIZ Insurance Services, Inc.
- 3. Agenda • Introduction – Richard Shaw • Insurance Primer • The Risk Management Process – How Can You Implement A Risk Management Program? • Contractual Requirements for IAQA Members • New Licensing Requirements for Mold Related Activities • Other Statutory Insurance Issues Facing IAQA Members • Evaluation Of Your Insurance Carrier – Will They Be Around To Pay a Claim? • Insurance Market Trends – 2012 and Beyond
- 4. About Richard Shaw Richard Shaw is a Vice President with CBIZ Insurance Services, Inc. which is a national insurance brokerage and business services company. Richard has over 25 years of experience in commercial insurance and has earned the CPCU and ARM insurance designations. Richard is a graduate of the University of Maryland and is active in a number of trade and professional organizations. He has been a frequent presented for the Baltimore Association of Subcontractors and the International Kitchen Exhaust Cleaning Association
- 6. General Liability • Covers bodily injury and property damage to a 3rd party. • Essential to any business • Required by virtually any contract or lease • Includes defense costs (should be outside of the policy limits) • Covers your negligence
- 8. Professional Liability • Covers professional services and related errors & omissions (such as failure to perform) • Scope of coverage depends on the type of work being performed • Defense costs are typically included in the policy limit
- 9. Environmental Insurance • Covers exposures related to remediation or release of pollutants. • Mold coverage can be provided under an environmental policy. • Can be written with professional and general liability under a single policy.
- 11. Property • Covers 1st party (what you own, occupy, or have possession of/responsible for) exposures. • Protects you against losses to your buildings, personal property, stock, and tenant improvements. • Can include loss of business income and extra expense
- 12. Inland Marine • Covers mobile equipment you own, lease, or rent that can be out in the field or in transit. • Protects things such as tools, any monitoring equipment, generators, etc. • Can also include an installation floater or builders risk for renovation or new construction work.
- 13. Crime (1st & 3 rd Party) • 1st Party covers theft of something of yours by your own employees – such as embezzlement or theft of property • 3rd Party covers theft from your employees of something belonging to your customer
- 14. Workers Compensation • Covers employees under statutory regulations for all States you operate in. • Includes medical expenses, lost wages, and rehabilitation.
- 16. Automobile • Covers vehicles you own or lease for bodily and property damage to a 3rd party. • Covers damage to or theft of your vehicle. • Covers hired and non owned vehicles, including excess liability for vehicles owned by employees use for company business
- 18. Umbrella • Provides an “umbrella” of additional liability limits • Typically covers over general liability, auto liability, and employers liability • Can also cover over professional and environmental liability
- 19. Other Insurance • Employment Practices Liability – covers discrimination and harassment • Cyber Liability – covers technology and 3rd party computer risks. • Fiduciary Liability – protects trustee(s) of company retirement and 401 (k) plans
- 20. The Risk Management Process – How Can You Implement A Risk Management Program?
- 22. Indentify Risks – What Risks Are Out There? • Physical risks associated with your office • Job related risks to general public (people and property) • Contractual risks – what you have signed/committed too • Environmental risks • Risks of use of automobiles • Risks to employees
- 23. Assessment of Risks – How Likely Something Is To Occur? • Use of business experience – what can and has happened to you or a peer company. • Use of actuarial data – from insurance company • Use of data from IAQA – White Papers • Local geographic data – Flood, fire, earthquake, and the legal climate
- 25. Evaluate Potential Consequences – What is The Worst Case Scenario? • Cost vs. Risk – what can you afford to pay and what can you afford to retain? • Understanding the exposures inherent in your business – How bad can the worst case scenario be?
- 26. Design Program –Best Ways To Deal With Risk • Retention of risk – self insure or partially self insure • Insurance – transfer of risk to an insurance carrier • Contractual transfer – transfer or limiting risk through a contract
- 27. Implement Program • Figure out the best method to protect your company. • Where you take risk try to eliminate or minimize it. • Best use of Cost vs. Risk
- 29. Contractual Requirements For IAQA Members
- 30. Typical Requirements – Insurance And Indemnification • General Liability • Workers Compensation • Automobile Liability • Environmental • Umbrella • Hold Harmless & Indemnification
- 32. What These Requirements Mean To IAQA Members • Meet IAQA requirements • Meet Statutory requirements • Protect IAQA member company • Protect IAQA customer and general public
- 33. How To Review Those Requirements • Have your insurance agent review the insurance requirements in contracts and statutory (licensing) documents – verify correct coverage and limits • Have indemnification and hold harmless wording reviewed – How far does it go and does it extend beyond your insurance?
- 34. What Does A Certificate Of Insurance Really Mean? • It is not a contract or an insurance policy • It reflects coverage in place at the time the document is generated • It is NOT proof insurance is in place for the full-term • Should be used in conjunction with a contract
- 35. What Should The Requirements Be For Work You Subcontract Out? • Not less than what you are required to carry for the same job • Any work you subcontract out becomes your work if the sub’s insurance is inadequate or not in effect • The IAQA member must be named as an additional insured
- 37. How Do You Get Subcontractors To Comply? • No compliance = No work • No compliance = No payment • No compliance = Find another subcontractor
- 38. New Licensing Requirements For Mold Related Activities (Virginia, Florida, & Other States)
- 40. What Are The Requirements For Mold Licensing? • There are requirements, depending on the State, for errors & omissions and/or environmental coverage • Requirements depend on whether the applicant is an assessor or if they do remediation work • Typically require a $1,000,000 limit
- 42. Other Statutory Insurance Issues Facing IAQA Members
- 43. Workers’ Compensation And Employers Liability • Many States are viewing “independent contractors” much more closely. Department of Labor requirements are frequently being followed by the workers compensation carriers. • You must have the proper documentation or risk being charged, at audit, for uninsured subcontractors. They will charge you as if it was direct labor.
- 44. Auto Insurance • Each State has it’s own legal requirements for the limit of liability insurance – most are very low • Contractual requirements will likely exceed statutory requirements
- 46. Evaluation Of Your Insurance Carrier – Will They Be Around To Pay A Claim?
- 47. What Is Admitted Versus Non- Admitted? • An admitted carrier is licensed in the State and pays into the insolvency fund. Typically they are “name” carriers like Hartford, Fireman’s Fund and Travelers. They are required to file rates and forms with every state the operate in. • A non-admitted carrier is licensed in the State but does not pay into the insolvency fund, nor do they file rates or policy forms. There are taxes and fees associated with doing business with this type of company. Examples are Lloyds of London and Scottsdale.
- 48. What Is The A.M. Best Rating And Why Is It Important? • A.M. Best is a rating bureau that evaluates the financial position of insurance companies versus their peer companies. • They give ratings for strength and a different rating for size. • Many contracts require a minimum A.M. Best rating.
- 49. Insurance Market Trends – 2012 And Beyond
- 50. What Is The Difference Between A Hard And Soft Market? • A soft market, which we are currently coming out of, has premiums going down, more capacity for coverage, and more carriers willing to write business. • A hard market has premiums going up, less capacity for coverage, and less carriers willing to write business.
- 51. Where Is Pricing Going? • Pricing has leveled off or started to go up • The rating bureau, Fitch Ratings, Inc., is predicting premium growth in 2012
- 52. Availability Of Coverage For IAQA Members • Coverage should continue to be available for IAQA members with good loss experience • Expect carriers to begin to perform more thorough underwriting and try to get higher premiums or get off risks they deem as unacceptable
- 54. Thank You – Enjoy Las Vegas!