What Makes Selling Insurance in a Hard Market So Challenging?

There has been a great deal of noise in the insurance industry regarding our current hard market cycle. But what exactly is a hard market and what makes selling insurance such a challenge in this type of economic environment?

What is a hard insurance market?

In the insurance industry, a hard market cycle can be characterized as a period of time when there is high demand for insurance products but a low supply of available coverage. Key factors such as inflation, fraud, increased litigation and weather-related catastrophic claims events are a few of the many contributors to a hard insurance market. More recently, the hard market was exacerbated by COVID-19.   

In a hard market, you are more likely to be up against:

  • Fewer available options. With a limited market, insurers will be more selective in the risks they are willing to accept. 
  • Increased premiums. To compensate for the many contributing financial factors as listed previously, insurers typically end up increasing their rates.
  • Changes in acceptance rules. In response to tight market conditions, carriers may not be willing to renew certain policies, or even permit changes to be made on policies in the middle of a term due to changes/updates in their risk appetite.   

Hard insurance market selling tips

There is a lot of advice out there regarding how to improve sales performance in a hard market cycle. Basically, it all boils down to deploying the following three main tactics.

  • Start the new-business and renewal processes early. With more stringent underwriting criteria, you need to plan on a longer lead time for applications. Plus, getting started early provides the extra time needed to re-market accounts that may have been nonrenewed. Typically, the optimal time frame in which to submit new-business applications is 120 to 150 days ahead of the proposed inception date, and 90 days for renewals.
  • Submit full and complete applications. Incomplete Acord applications, missing supplemental forms or absent loss runs will only delay the quoting/renewal process. This can be frustrating for insureds having to wait until the last minute. A complete submission will help an underwriter quickly and efficiently log in new business, streamlining processing and avoiding delays. 
  • Maintain communications with policyholders. For renewals, it’s important to help insureds understand what they might be up against in terms of their coverage and premium. For example, if you know that the incumbent carrier will be looking at a 15%-20% increase or is reducing general liability limits on a particular line of coverage, convey this to your insureds — and do so as early as possible. Then, see how you might be able to help them secure the coverage/limits/pricing they need. Not only does this demonstrate your commitment to service, but it also helps determine whether you need to approach another carrier.  

Conclusion

To be clear, efforts insurers impose in a hard market aren’t meant to make things more difficult for agents, but instead are set to ensure that companies remain financially secure so that they can make good on their promises to pay claims. By starting the marketing process early, submitting complete submissions and maintaining communications with policyholders, you’ll be in a stronger position to successfully ride out this cycle.

About FastrackCE

Focus less on your continuing education credits and more on selling! At FastrackCE, you can get all your life and health and property and casualty continuing education credits done in one place and at your convenience.  We offer online courses in most states covering a broad range of topics, including most of the state-mandated courses that include long-term care – to name just a few. For more information, call 800-544-3605 or visit us at fastrackce.com.

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When Is It Necessary To Purchase Insurance From a Car Rental Company?

After a year of staying close to home, more Americans this summer are looking for an escape and hitting the open road. For those considering renting a car, whether or not they should opt for the insurance offered by the rental company is a common issue of concern.

Most rental companies offer the following common insurance options:

  • Loss or collision damage waiver in case the rental is stolen, damaged or vandalized.
  • Liability or supplemental liability insurance in the event the driver causes damage to other vehicles or property; this typically includes coverage for medical expenses.
  • Personal accident insurance that pays for medical expenses for both the driver and the passengers.
  • Personal effects coverage for items stolen from or damaged in the rental car.

So, is it absolutely necessary to buy insurance coverage from a rental car company? In many cases, the answer is no. However, there some situations that should be considered. This summer, help your policyholders better understand whether they need the coverage the rental car company is trying to sell them or if their personal auto or homeowners’ policy offers the protection they need.

When insurance follows the driver

In general, auto insurance follows the car. However, when it comes to renting a vehicle, the insurance (depending on the policy) will follow the driver, extending to the rental — just as if the individual were driving his or her own car. As long as a policyholder has liability coverage on his or her vehicle, that protection will transfer to the rental car.

It’s important to remind policyholders that the limits they have on their current personal auto policy are the same limits that will carry over to the rental car. For example, insureds who have a personal auto policy with liability only won’t have comprehensive or collision (full coverage) for damage to the rental. In this case, they should opt for coverage in the event the rental is damaged or stolen. In addition, an insured with low liability limits may want to consider increasing coverage prior to taking a trip or purchasing supplemental liability insurance.

Personal injury protection (PIP) and medical payments (MedPay)

In most cases, it won’t be necessary for insureds with personal auto policies to purchase the rental company’s accident insurance. This is because a personal auto policy with PIP will provide coverage for the driver and passengers for things including medical bills, legal fees, lost wages, etc., if they are involved in a vehicle accident — regardless of fault. MedPay typically only pays for the driver’s injuries and medical bills. However, individuals who don’t have health insurance may want to consider purchasing the accident insurance offered by the rental car company. Why? Because typically, once all other forms of medical payments have been exhausted, a health insurance plan will have the final financial responsibility for treatment related to car accident injuries.  

Traveling with personal items of value

Alert policyholders to the fact that the comprehensive coverage on their personal policy provides coverage only in the event the rental car is stolen, and it won’t cover stolen personal belongings. When traveling with personal items of value or if they just want the additional protection, they should consider coverage for personal effects. However, insureds with a homeowners or a rental policy will have coverage for theft.

Conclusion

It’s always a good idea to regularly review coverages with your policyholders. Consider putting an article in your agency’s newsletter or next email reminding them to give you a call if they have questions regarding rental car coverage so you can review coverages together!

About FastrackCE

Need to complete your insurance continuing education credits this summer? FastrackCE can help you get all your life and health and property and casualty continuing education credits done in one place and at your convenience.

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Summertime Celebrations: Helping Your Clients Understand Special Event Insurance

Summer is a time for weddings, family reunions and other celebratory events. This year, as COVID-19 restrictions are lifted, we’ll likely see a record number of events this summer, as well as an increase in attendance. As a result, your clients will be looking to you, their insurance professional, to help them understand what their liability exposure could be for these types of gatherings and how event insurance can help provide protection. The following are commonly asked questions insureds ask when it comes to event insurance coverage.

Is event insurance necessary?

Most any venue (indoor or outdoor) will require some type of special event liability insurance. Even if the event is at a private residence, the homeowner can be sued for accidents and injuries that guests may incur. Advise your insureds to request insurance requirements and limits from their venue of choice as early as possible, so you have time to secure coverage and prepare a certificate of liability insurance.

What does a basic event liability insurance policy cover?

Special event liability provides protection against claims made by third parties for bodily injury, accidents or property damage that occurs during an event. Policies will differ among carriers and the types of event, but coverage is generally provided for:

  • Liability costs associated with an injury.
  • Legal costs for property damage caused by event attendees.
  • Cancellation coverage that reimburses a percentage of fees if the event must be canceled due to issues outlined in the policy.

What about coverage for alcohol-related risks? 

Be sure to ask your insured whether they will be serving or selling alcohol at their event. Remind them that if a guest drinks too much, they could be held liable. And while not all carriers include liquor liability insurance in a special event policy, most can add it or provide coverage under a separate policy. 

Will a homeowner’s general liability policy extend to an event held at the insured’s residence?

Most insureds assume that their homeowner’s policy will cover any liability claim issue that may arise when hosting a special event. The fact is, the liability limits on a homeowner policy might not provide enough protection for a large event — especially one where alcohol is being served. When discussing coverage for an event that is being held at your insured’s private residence, be sure to review their home insurance policy to determine whether the additional protection of event coverage is needed.

Are these policies expensive?

Most insureds will want to know the cost of event coverage. In general, a basic policy will run between $350 and $400. However, if liquor is being served, the premium could double. Before running a quote, be sure to get all the information regarding the event, such as whether alcohol will be served, how many people will be in attendance, the type of event, venue insurance limits/requirements, etc.

Conclusion

Special events are just that — meant to be special. Be ready to help your insureds understand the importance of having the right insurance protection so they can focus less on the risk and more on celebrating!

About FastrackCE

Need to complete your personal lines insurance continuing education credits this summer? FastrackCE can help you get all your life and health and property and casualty continuing education credits done in one place and at your convenience.

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Addressing Wildfire Policy Concerns With Your Clients

To say that the designated fire season time of the year is limited to just the summer months wouldn’t be accurate. According to the U.S. Department of Agriculture, today’s wildfire “season” has unfortunately become an all-season, year-round event.

In 2020, due to extremely dry conditions and unusually warm temperatures across much of the country, the nation experienced significant climate anomalies. In fact, last year was the warmest year on record in the U.S. As a result, the nation had one of the most active wildfire seasons to date, burning nearly 10.3 million acres — the largest acreage consumed by fire in the U.S. since 2000 — and exceeding the 2000-2010 average by 51%, according to the National Oceanic and Atmosphere Administration.

As things heat up across the nation, your personal lines clients will likely be looking to you, their insurance professional, to help them better understand coverage issues as they relate to wildfires under their homeowners’ insurance policies. The following are common issues surrounding homeowners’ insurance and coverage for fire-related losses.

Homeowners’ insurance and wildfire insurance

As you’re aware, most all standard homeowners’ insurance policies provide coverage for fire damage to the insured dwelling and any attached structures. However, if your clients live in an area where there is a higher-than-normal risk for wildfires, they may need to purchase additional coverage, typically at an additional premium that is based on a number of factors such as where the home is located and the distance to a fire station or hydrant, to name just a few. Simply put, wildfire insurance is really just a homeowner’s policy, but it is designed to protect homes in high-risk fire locations.

Tip: Now’s a good time of the year to review policies with your homeowner clients who may be in high-risk areas and discuss the different types of coverages available to ensure they have enough protection to replace their home and personal property.

Structures not attached to the dwelling

Structures that aren’t attached to the main dwelling (e.g., a detached garage, pool house, fencing, gazebos, outdoor garden and storage shed), will have coverage under most standard homeowners’ policies in the “other structure” provision. However, your clients may not be aware that the typical amount of coverage provided for other structures is based on a percentage of their dwelling coverage. Every carrier is different. Therefore, it’s difficult to say what that specific percentage may be. However, most standard policies allow for 10% or 15% of the dwelling to cover other structures not attached to the home.  

Tip: Homeowners are always making improvements to their property and don’t always take the time to inform their insurance agent as to these changes. When writing a new homeowner’s policy or when reviewing existing policies, remind clients of the importance of contacting your agency when they have added any new structures to their property. Then, crunch the numbers to make sure their limits are where they need to be in the event of a fire loss. 

Protection for personal property

Coverage for personal property in a standard homeowner’s policy is also based on a percentage of the dwelling’s coverage. So, in the event of a fire, coverage for personal property will be limited to whatever the policy limit is on the home. This number will vary among carriers, typically ranging anywhere from 50% to 75% of the dwelling.   

Tip: If your homeowner clients have concerns as to how much coverage they have for personal property, advise them to take an inventory of their home’s contents and the estimated replacement cost of each item, and request that they email the list to your agency for safekeeping. Again, run the numbers to ensure they have the most appropriate limits.

Additional living expenses

Finally, it’s always a good idea to review coverage under their policy’s “loss of use” provision. Your clients may not be aware that in the event they are unable to live in their home due to a fire (or any other catastrophic event), their policy will help cover costs associated with being relocated to a hotel or motel, meals and other additional living expenses while their home is being rebuilt or repaired after a covered loss. The limit for this coverage is also a percentage of the dwelling coverage. Typically, the coverage limit for loss of use is about 20% to 30% of a home’s insured value.

Tip: While policies will differ, it’s important to let your clients know that loss of use involves more than just providing costs for additional living expenses. In fact, many policies also include coverage for expenses associated with fuel or mileage, clothing, pet boarding, storage units, and car rental and public transportation costs.

Last, it’s important to note that in certain states or other wildfire-prone areas, there may exist homeowners’ policy exclusions for wildfires, or homeowners may be denied coverage altogether. In these situations, it’s important to discuss options with your clients to see whether they may be eligible for coverage through a surplus lines carrier. In very high-risk areas or where there is a moratorium prohibiting insurers from offering coverage, there is always the Fair Access to Insurance Requirements Plan, otherwise known as FAIR. As a state-mandated program, FAIR provides insurance access to homeowners who are having difficulty securing coverage.

About FastrackCE

Need to complete your personal lines insurance continuing education credits this summer? FastrackCE can help you get all your life and health and property and casualty continuing education credits done in one place and at your convenience.

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Watercraft Policy Coverage Options and Exclusions: Summertime Tips for Agencies

With summertime fast approaching, more of your clients will likely be adding coverage for various types of watercraft. However, because your agency might not write these types of policies all but once a year, and that policyholders are relying on you to guide them toward the coverage they need in order to protect their investment, now is a good time to refresh your watercraft insurance know-how. 

The fact is, boat policies are often as diverse as the watercraft they insure. As a result, clients might be uncertain as to what is and isn’t covered and opt for the most basic of policies. As an agent, the last thing you want is for a claim to occur and for a policyholder to find out they don’t have coverage or were only partially covered for their loss. The following are important key coverages and policy exclusions that are typically not included in a standard boat or watercraft policy but are too important to leave out of the conversation with your insureds.  

Optional coverages and special endorsements

Fuel-spill liability. Not typically included in most standard boat and watercraft liability policies, this provides coverage for claims involving the cleanup or third-party damage due to the accidental discharge of fuel or oil. Some examples would be a boat catching fire, colliding with another object, becoming grounded, or simply sinking and causing a spill. With stricter federal and state environmental laws holding boaters liable for the containment and cleanup, this type of coverage has become increasingly vital.

Emergency service coverage. Much like roadside service for a vehicle, this optional coverage provides coverage for towing, medical services, and mechanical labor if a boat becomes stranded.

Equipment coverage. Provides coverage in the event a boat sinks or is involved in a collision in which accessories and equipment such as fishing and safety gear or a pricey fish-finder or navigational system are damaged or lost.  

Repair cost endorsement coverage. For pricier watercraft, standard boat policy limits might not be enough to cover custom upgrades, modifications, or specialized motors and equipment. Many carriers offer an endorsement that provides additional coverage above what the policy offers for repairing and even replacing equipment in the event of a loss. 

Common policy exclusions

While most coverage for boats remains rather standard, there are more-common policy exclusions that you’ll want to review with your clients. 

  • Wear and tear. Because water (particularly saltwater) is damaging to a vessel, deterioration is a common factor in the normal wear and tear of a boat and isn’t typically included in coverage.
  • Coverage for competitions or racing events. Boating races typically involve high speeds and are subject to risks involving collisions and injuries. Some carriers offer supplemental insurance for this type of risk.
  • Boat trailer liability. The liability of towing a boat trailer is covered under an auto policy — never under a boat policy. However, the trailer is only considered eligible for liability coverage under a vehicle policy if it is designed to be towed by a motor vehicle, and only if it’s owned by the named insured on the towing vehicle’s auto policy, or it is permanently attached to the towing vehicle.
  • Damage to the boat or equipment from marine life. Typically, boat insurance won’t cover damage to a vessel caused by sea creatures. If clients indicate that they might be headed into waters where there could be an exposure to hazards involving marine life, you might want to discuss adding additional insurance to ensure they have coverage. 

Additional claims tips

Avoiding all claim situations is impossible. However, there are ways to lessen certain risk exposures. In addition to reminding policyholders to always report a claim as soon as it occurs, the following are other good claim mitigation tips for your boating clients.   

  • Remind them that if they decide to sail out of their specific navigational area, they must notify your agency.
  • Warn about the dangers of underwater collisions when exploring new waterways or when boating in murky water conditions.
  • Advise clients to maintain a detailed inventory of their boating equipment (pictures, serial numbers, costs, etc.). In the event of a theft or other loss, they’ll have an accurate list to present to the claims adjuster. 
  • Advise of the benefits of taking a boating safety course to learn more about how to avoid an accident.
  • Most boat-sinking events occur due to leaks while a boat is docked. Stress to policyholders the importance of maintaining their docked boats from water wear, tear and corrosion and regularly checking small parts and the overall condition of the boat — even during the off-season.
  • Remind clients that their boat coverage only covers named drivers of the vessel. If they have a change in drivers, they must notify your agency.
  • Warn of the dangers and consequences of being found intoxicated or under any other substances at the time of an accident, as this could lead to costly liability claims or even a claim denial. 

And when the season comes to an end…

You’ll likely encounter clients who, when summertime is over, will opt to remove all coverage for their boat. Now’s a good time to remind them that even during the off-season, watercraft can be subject to damage or liability issues — costs that they’ll have to cover out of pocket. Remind them that boat insurance can be maintained year-round, providing protection against fire, vandalism, theft, liability and winter storms.

We hope these tips will help you keep your boating and watercraft policyholders safe and claim-free!

About FastrackCE

Need to complete your insurance continuing education credits this summer? FastrackCE can help you get all your life and health and property and casualty continuing education credits done in one place and at your convenience.

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