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Personal Planning: Distinguishing Reality From Interpretation
Two major problems for insurance sales professionals are the limitations of their own mind-set and the lack of definition when it comes to success. Many salespeople cannot visualize themselves as being capable of earning $100,000 each year. Many create a comfort barrier in the $50,000 range. There are others who do not define dollar goals for the year and end up with what they get. In a business in which producers write their own paychecks, why would some limit income potential? By examining the interpretations of salespeople, this question may be answered. INTERPRETATION People tend to view themselves in the image of how others see them or how they want others to see them. For example, if a man wants to look attractive to a woman, he lives out an internal representation of himself that meets his definition of attractive, and hopefully meets hers as well. If, in this instance, the man's internal representation of attractive bears a resemblance to the woman's reality, then he will indeed be attractive. If, however, his internal representation doesn't match her reality of attractive, then his attractive appearance concept won't be real, and it will not get the desired results. REALITY Inaccurate interpretations allow for observations and decisions based on an absence of reality. The result is bad decision making. Therefore, interpretation should be avoided. The focus should be on the face value of facts. The producer who views the town where the agency is located to be small, limited in potential, and already sewn up by the competition is creating a negative interpretation. Decisions based upon such interpretations are limited because of the mental and physical confines they create. Look at reality, not interpretations of reality. To change an interpretation into reality, it must be restated. For example, if a suspect is insured by a competitor, the reality may be restated, 'Currently, Suspect X is insured by the competition, but I will continue to market products and services to that suspect so when he or she is ready to make a change, they'll know about this agency.' Note: The restatement does not demand the suspect to automatically switch from the current agency to the producer's agency. It is a realistic statement that incorporates logic into its core. If a producer wishes to capture a suspect, then constant marketing is necessary. With timed, spaced, and repetitive direct-mail marketing, telemarketing, advertising, and other promotional means, the suspect will know about the existence of the agency. There is no guarantee that the suspect will switch to the agency in pursuit, but the agency will have done its share of marketing to increase the probability of the contact occurring. INTRAPERSONAL Interpretation of facts is not only interpersonal, but also intrapersonal. That is, interpretation does not only occur when salespeople look at outside factors that impact the agency. Interpretation can also occur within an agency and within a person. For example, a producer may be satisfied with a production/commission level. Satisfaction, in this context, is another word for complacency, and complacency is limiting. Never be satisfied with business. Some may say this philosophy leads salespeople to become greedy. Frankly, that may be true, but only when applied to specifics, not generalities. GOALS This is where definition plays an important role. Open-ended non-specific goals always cause problems because they create non-directional, unorganized wheel-spinning. All goals, without exception, should be clearly defined. After identifying the goal, discern what it takes to attain it. From that point, focus on the behavior necessary to produce the goal, not the result. Begin with the end in mind to create focus, but not on the end result. Focus on the beginning and doing what it will take to attain the end result. Keeping the end result in mind is the motivation for continuing to examine daily functions and time consumption. If the activity and time consumed do not lead to the end result, then the activity is a negative one. Successful people achieve their goals by clearly defining what success means to them. They focus on an end result by monitoring all the activities that move them toward that end. Attainment of an objective isn't negative unless the objective is negative. When applied to sales, a producer must ask the following types of questions in order to define success: What does success mean? How will I guide and ensure success? What is the timetable? Any factor can be incorporated into the questions that define success. By doing so, the producer creates a balance in goals. A commitment to defined, stated, and written objectives determine success. Take reality and react to it in an effort to attain success....

Why it’s Important to Learn Interpreting the Price Action Signals
Most of the time, the traders are busy collecting the information. Due to gathering the huge information, sometimes, they become puzzled. For this reason, they distract from the right path and thus face major problems. However, the majority of traders focus on a complex analysis of the market. They think, through the complex analysis, they might get the correct data which will help them to take the right decision. Unfortunately, it’s a wrong assumption. The situation is totally the opposite of it. Bear in mind, to get the more precise clues, you have to invest your time. And always try to keep everything simple so that you can trade smoothly. However, smart traders try to apply the price action strategy for getting success. Because, by adopting this approach, they can easily place the trades and make a big sum of money. But, newbies think interpreting the price action is a tough task. But, as a retail trader, you need to understand, if you once learn to interpret the price action properly, you might get the rewards. So, in this article, we will demonstrate the significance of learning to read the price action. Let’s know about these. Transparent and clean Pro traders choose the price action so that they can analyze the market precisely and get a transparent idea about it. Bear in mind, as a newbie, if you try to get the opinions of others. Everyone will share their own point of view. For this reason, you might be confused. That’s why it would be tough for you to take the decision. But, if you can interpret the price action chart properly, you may take your decision individually. So, you don’t need to take the suggestion from others. As a result, you might also keep yourself away from the noises. Explore the free educational resources at Saxo and trade the market in a clean interference. Of the money and for the money By interpreting the price action chart, you may understand, what others traders will do. So, if you know what’s going on in others people's minds, you may easily take your decision. You may be surprised to know about this but it’s true. Such as, if the value goes up, you might see, the number of the seller will be increased. On the other hand, if the value downs, the number of the buyer will be increased. So, if you observe the price action, you may know what the majority of traders want to do. That’s why price action analysis is mostly popular among traders. Not need to know the major news If you read the price action properly, you may know about the changes what has been occurred in the investment industry. So, you don’t need to know about the major news of the market. Sometimes, to know about the major news, traders invest huge time. But, to get success, you just need to collect the relevant information. Sometimes traders learn about the major news after its influence has manifested itself in the market. As a result, they fail to deal with the problems. But, as a retail trader, if you trade the price action strategy, you don’t need to worry about the news. However, sometimes traders get the fraud news and for this reason, they face major problems. But, if you use the price action strategy, you might go on the right track. Most importantly, you should have the skills to trade at the important pivot levels in higher time frame. Keep in mind, price action will aid you to know about the news and its impact. So, if you can take the right steps, the result will go in your favor. So, you should keep your focus on the price action to get success. However, if you want to overcome the trading obstacles, you should learn how to read the price action. Remember, if you can utilize it properly, it will become lifesaving for you. ...

Are Your Life Insurance Policies Written In Gibberish?
I recently read four news items that relate to how consumers perceive Life insurance: Insurance companies are “horrible” at getting people to understand what they’re talking about. Surveys show that insurers are at, or near, the bottom of simplicity ratings. More than 60% of people who own Life insurance have no idea what they own or how it works; and 29% said that although they need more insurance, no one has asked them about it. More than one in four (26%) of Americans prefer to buy Life insurance through the internet, mail, or over the phone. Numbers one and two above result in part from what some call “gibberish,” or incomprehensible policy language. Sometimes, the proposals or other explanation of the policies can leave the buyer confused, unclear, or misinformed about what they read. As I’ve discussed in previous columns, although policy language is necessarily complex, it can be deliberately confusing or worse when discussing issues such as Life insurance dividends and cash values. If you’re one of these buyers, don’t feel that you’re alone. Sometimes the very people who create policies will announce up front I’ve been there on occasions when they’ve done it that, although they wrote as clearly as possible, they still need to await court interpretations before they’ll know the full impact of what they wrote. Even policies tried and tested in court cases are still open to further conflicting interpretations in different jurisdictions. Because every insurance policy is a legal contract, it should be precise and unambiguous. However, even with careful writing, policies are subject to claim situations which could be interpreted in more than one way. Although insurers try to be clear about what they do and don’t intend to cover, it seems nearly impossible to describe every possibility of coverage and of exclusions in a single contract. As court interpretations become known, insurers will sometimes adjust policy language accordingly and these adjustments will then require interpretation. In other word, policies need to be written in legalese that anticipates how they might be challenged, misunderstood or distorted into paying claims that were not intended to be covered, all while remaining understandable to the non-technical lay policyholder. It can’t be done! For the consumer, it comes down to this: If it were theoretically possible to have this choice, would you prefer to buy a simple, non-technical policy written in third-grade language which forces the insurer to pay many claims not intended to be paid and thus forced to charge premiums several times higher than a relatively clear and court-tested policy? As an alternative, would you rather pay the lower premiums based on policy language that narrows down claim payments to those defined more clearly (although perhaps not perfectly)? We’ll need to be satisfied with the latter because I don’t think that many state regulators will approve over-simplified policies even though there’s a movement toward plain language policies which might be a compromise. I share with you the agonies of reading complex policies. As an agent and consultant, I need to wrestle with their intricacies and shadings and try to explain them; and, as an expert witness, I need to offer these explanations to judge and jury. Still, as an insurance buyer like you, I feel far more comfortable knowing that the policy will serve me as spelled out (although necessarily at length) in its language. As the drafters of policies, then, insurers have little choice but to have some complexity in their policies. It’s up to agents to try to help policyholders to understand them. Although agents’ help can be invaluable, they, too, are limited not only by the patience of their clients, but also by time constraints and the impracticality of discussing every possible eventuality. The only other party to complete the delivery of understanding, then, is you, the insurance buyer (“you” includes your accountant, lawyer, consultant or other qualified advisor). Although everyone, including courts, might recognize reasonable limits on how deeply you’re expected to read or understand all of your policies, it’s also reasonable to believe that you should be at least somewhat familiar with some of the most critical documents in your life. After all, Life insurance policies protect your most valuable assets including your income and provide for the financial security of your beneficiaries even after your death. That’s why story # 3 above disturbs me. Three in five people (60%) who own Life insurance know very little about this valuable property. They can’t blame this lack of knowledge on the policy language because: (a) this language is clear in most policies; (b) the agent can certainly explain the policy, verbally and in writing; and (c) Life insurers generally have policyholder service departments that can help. As for the 29% of folks who need more insurance but aren’t asked about it, this provides another illustration of how today’s consumers are taking more responsibility in dealing with all aspects of insurance. Much of middle America, and almost all disadvantaged Americans, are ignored by Life insurance agents because there are fewer agents serving our growing population, and most of them are dealing with the higher-income prospects. However, a comprehensive annual review of all your insurance needs with your agent should open the door to a discussion of all your needs. This series of columns is dedicated to helping consumers understand their policies and how to deal with them. Still, at best, these columns singly or collectively can barely scratch the surface. I hope that, at a minimum they help show you how you can get help and self-help, and why you should want to do so. Now we come to story #4, dealing with consumers’ preference for buying insurance through the Internet, mail, or over the phone, rather than from an agent. The main reasons for using these impersonal, by-the-numbers sources are: price, getting-over-with-it, avoiding agents who might mislead or use sales pressure on you, and preserving your privacy. Let’s discuss each of these issues. Price. Internet or mail-order insurance is often less expensive than buying through an agent but not as often as you might think. Lower premiums can be misleading because other charges or fees (sometimes hidden or camouflaged) can hit. Agents might well be able to offer rates lower than the lowest Internet offerings, but you won’t know this unless you talk to an agent. Still, even if the internet-mail-phone source is genuinely less expensive, bear in mind that premium alone does not dictate value. The agent might and often does, add value to the relationship far beyond the difference in premium. Getting over with it. Shopping for insurance should not be a painful experience; it should be the reverse. After all, you’re protecting your assets, your money, and your family’s financial health. Buying insurance should leave you with a solid feeling of accomplishment. If there’s tedium in the process and there can be dealing with a helpful professional can alleviate the problem It should be a refreshing experience, and as you review your coverages (yearly at least) you should feel that you’ve mastered it. Avoiding agents This might involve wanting to avoid dealing with such technicalities as policy language, why premiums differ among similar-looking policies, agents’ explanations of policy terms, having to evaluate what agents are saying, and guarding against abuse if you don’t know the agent.. Although these feelings are understandable, you can overcome them by reaching for a comfort level of feeling and then knowing that your agent is putting your interests above all else, is competent and able to deliver far more value than a premium difference (if any) , and is working for you to manage the unknowns that you fear about buying insurance. For you, this heading should be “avoiding unknowns through the help of an agent,” and it should be on the plus side of your decision-making. Previous columns have discussed how to evaluate agents and get maximum leverage through them. Preserving your privacy. Unfortunately, there’s no “fool-proof” guarantee of total privacy anywhere; ongoing incidents of data theft from even giant computer-savvy firms (not to mention the U.S. government and the military) are far too common. Your privacy will be as much at risk in dealing with sources thousands of miles away as it will be with a local professional agent, lawyer, or accountant. The Bottom Line We don’t live in a perfect world. Despite its faults, there’s no substitute for insurance – so let’s deal with it on the most favorable terms possible. It makes sense to identify and neutralize potential pitfalls, rather than to close your eyes to them. This applies to both insurance policy language and how you buy insurance. ...

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... (26%) of Americans prefer to buy Life insurance through the internet, mail, or over the phone. Numbers one and two above result in part from what some call "gibberish," or incomprehensible policy language. Sometimes, the proposals or other explanation of the policies can leave the buyer confused, unclear, or misinformed about what they read. As I've discussed in previous columns, although policy language is necessarily complex, it can be deliberately confusing or worse when discussing issues such as Life insurance dividends and cash values. If you're one of these buyers, don't feel that you're alone. Sometimes the very people who create policies will announce up front I've been there on occasions when they've done it that, although they wrote as clearly as possible, they still need to await court interpretations before they'll know the full impact of what they wrote. Even policies tried and tested in court cases are still open to further conflicting interpretations in different jurisdictions. Because every insurance policy is a legal contract, it should be precise and unambiguous. However, even with careful writing, policies are subject to claim situations which could be interpreted in more than one way. Although insurers try to be clear about what they do and don't intend to cover, it seems nearly impossible to describe every possibility of coverage and of exclusions in a single contract. As court interpretations become known, insurers will sometimes adjust policy language accordingly and these adjustments will then require interpretation. In other word, policies need to be written in legalese that anticipates how they might be challenged, misunderstood or distorted into paying claims ...

Adjusters Say The Darnedest Things
It’s inexcusable when a claim is denied for no other reason than 'It’s not covered.' The insured is owed a reason for a claim denial, by contract or law. Bill Wilson shares some examples of incredulous claims (dis)service. About five years ago, I jointly developed a seminar with a faculty member called 'How to Win Friends...and Influence Adjusters.' The seminar focuses on policy gray areas and, through case studies (actual claims and court cases), applies a methodology to convince the adjuster that the insured’s/agent’s interpretation for coverage is just as valid as the adjuster’s initial basis for claim denial. However, sometimes a claim denial arises that defies logic and reason. Here’s a Personal Lines example of such a claim that another faculty member passed along recently: An insured who was moving loaded clothes and personal property into her car. She placed a magnifying glass on the leather seat of her car and left it there for a few hours. When she returned, she discovered that the focused sunlight had burned a hole in the seat. The adjuster denied the claim on the premise that it wasn’t within the definition of 'accident' in the policy as 'a sudden, unexpected, and unintended occurrence.' The policy defines a 'loss' to include 'direct and accidental loss of or damage to your car.' Under the other-than-collision (OTC) coverage, the insuring agreement says, 'We will pay for loss except loss by collision, but only for the amount of such loss in excess of the deductible.' So, for the insuring agreement to be triggered, there must be a 'loss.' For there to be a 'loss,' we must have 'direct and accidental loss.' Note that we have a definition within a definition: 'loss' is essentially defined to be a 'loss.' These types of circular definitions don’t hold up well in court. This alone is enough to warrant redrafting the contract. The key word is 'accidental.' Was this 'accidental,' as defined by the policy? Was this a 'sudden, unexpected, and unintended' occurrence? It’s unlikely that the insured intended to burn a hole in her car seat — which means the damage was probably unexpected. That leaves 'sudden.' Because the loss took place over a period of time, perhaps the adjuster interpreted it as not 'sudden.' However, most courts don’t accept this interpretation. 'Sudden' usually applies to the insured’s discovery of the loss. In other words, if an insured knows that a loss has been continuing over a period of time, it’s usually not covered — and many, if not most, policies have an exclusionary provision for 'neglect.' Dictionaries define 'sudden' to mean: (1) 'An unexpected occurrence; a surprise' (Webster’s 1998 edition), (2) 'Happening without warning; unforeseen' (American Heritage dictionary), and (3) 'Happening or coming unexpectedly' (Merriam-Webster). In other words, 'sudden' means unexpected or unforeseen, a surprise — and it appears likely that the insured did get a surprise. Here’s another example, involving a Commercial Lines claim. The insured cement contractor was pouring a concrete driveway at a home in a new subdivision. As nightfall approached, he inadvertently caused cement to be splattered on a nearby garage door, necessitating its replacement at a cost of $827.69. The owner of the home made a claim for his negligence. The insured received a letter from his CGL carrier’s Senior Claim Representative denying coverage, citing Exclusions 2.j.(5) and 2.j.(6). Upon receiving a response from the agent to this letter, the claim rep sent another letter citing Exclusions 2.j.(4) and 2.a. We made these points in an attempt to convince the adjuster to pay the claim: Exclusion 2.j.(5) — 'That particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the 'property damage’ arises out of those operations ...' [emphasis added]. The insured was not working on the door. Exclusion 2.j.(6) — 'That particular part of any property that must be restored, repaired or replaced because 'your work' was incorrectly performed on it ...' [emphasis added]. The insured was not working on the door. Exclusion 2.j.(4) — 'Personal property in the care, custody, or control of the insured ...' The door was neither personal property (ISO added this wording in 1986 and separated it from the 'real property' exclusion), nor was it in the insured’s care, custody, or control. Exclusion 2.a. — 'Bodily injury’ or 'property damage’ expected or intended from the standpoint of the insured. This exclusion does not apply to 'bodily injury’ resulting from the use of reasonable force to protect persons or property.' Yes, believe it or not, the adjuster actually cited the intentional loss exclusion as a basis for denying the claim! The adjuster admitted that the insured probably didn’t do this on purpose, but he should have 'expected' that the loss could happen! Interpreting the exclusion in this way would mean that insurers would never have to pay a negligence claim and policyholders’ premiums would plummet by at least two-thirds! Everybody wins! We argued that because the insured foresaw that the door could fall on him, it was an act of self-defense, triggering the exception. We also cited the state’s bad faith settlement provision that’s triggered when a claim isn’t paid even though '... liability has become reasonably clear.' Although we provided 39 pages of authoritative documentation to support coverage, the carrier still refused to pay this $827.69 claim. At that point, the agent turned our file over to the insurance department. Their investigator telephoned the company on April 11. In a letter dated April 12, the insurer’s claims manager stated, 'In the spirit of compromise we will send our insured a check in the amount of $827.69.' Yes, adjusters do sometimes say the darnedest things....

A Corporate Focus On Risk Management
Alternative Title: 'YOU DON'T KNOW WHERE YOU'RE GOING, UNTIL YOU KNOW WHERE YOU'RE AT' OSHA, WHMIS, CERCLA, ERISA? What do they all mean? If you are involved in the protection of your company and its assets, you need to know what these and other acronyms stand for. D&O, E&O, CGL, ACV, RCV, and so it goes! Each industry has its own specific jargon, and the insurance industry has contrived to make its own terminology as difficult to understand as any. Consumers navigating through the maze of policy wordings, products, and suppliers are often so daunted that they give up and rely on their suppliers to make decisions for them. Most suppliers and intermediaries act with the highest integrity toward their clients, the source of their income. However, it is only natural to think in terms of one's own best outcome, and a supplier of a product will always offer the best solution available from its own resources before considering alternatives. So anyone who has the responsibility of protecting a corporation's assets needs to understand basic steps to take in structuring a program that provides comprehensive protection at a reasonable cost. Although a risk management review is most timely before an insurance renewal, it can be undertaken at any time. In fact, it's wisest to look at the insurance program only after the risk management review is complete. A common misconception is that the purchase of insurance achieves the goals of risk management. But insurance does not affect risk; it only affects the effects that arise from the risk. A useful question to ask is this: If I did not have any insurance at all, what would I do differently? If this question is applied systematically to every aspect of a corporation's operations, the initial evaluation will serve a very useful purpose: You will know which risks can be endured and which risks will shut down your corporation. If we say that risks you can easily assume are rated 0 and those you cannot assume are a 10 (and must therefore be insured), then those that you have rated 1 through 9 need to be carefully considered for their impact. Exhibit 1 will give a clearer perspective on this issue. If the chance of a risk is a 10 (that is, if it would destroy the business), the risk would have to be insured or the operation could not logically continue. If the chance of a risk was a 3 and the impact was only 2, the options will change and risk management can be implemented to minimize both the chance of a loss and its impact if it occurs. The further above 5 the point of risk falls, the greater will be its potential effect on corporate assets-and the greater the need for a risk-transfer vehicle, such as an insurance policy. The further below '5' the risk falls, the more viable it becomes to assume that risk. Loss-prevention techniques are appropriate anywhere in the exposure analysis, as long as cost and effectiveness are kept in perspective. Loss prevention must be the only consideration where injury or death, either to employees or the public, are concerned. No amount of cost cutting or saving can justify even a remote chance of injury or death. As Workers' Compensation and lawyers' litigation files will show, these events happen even when good loss-prevention practices are in use. However, loss prevention for the sake of creating the perfect risk-or 'pig-iron under water' in the old-time Fire underwriter's parlance-also has to be avoided. The evaluation of risk is not something to leave to a supplier, since missed exposures will always be possible, particularly if the supplier does not have a product to fit a certain area of risk. If the corporation does not possess the necessary expertise, seek the services of a risk management consultant. Let's define the function of a risk management consultant. Many insurance consultants are available whose primary function is to monitor existing insurance programs, analyze policy wordings and liaise with the selected insurance broker; this should not be the primary role of a risk management consultant. A risk management consultant must operate as an extension of his or her client in the identification and evaluation of factors that could imperil the integrity and profitable operation of the client company. The consultant should then propose appropriate solutions to those factors, and implement and monitor the agreed procedures. A risk management analysis will consider all aspects of the operation including: cash management; 'just-in-time' inventory management; availability of alternate suppliers; key customers; key facilities, equipment, and people; computer dependence; valuable papers, designs, and intellectual property; quality control; loss prevention to real and personal property; transit exposures; foreign contract evaluation; internal and external crime audit; product liability; hiring and firing practices; safety committee review; employee and public safety; automobile and fleet safety; directors, officers and fiduciary responsibilities; product tampering; extortion; kidnap and ransom; credit risk, claims and self-insurance monitoring; claim funding alternatives; environmental hazards; effects of marketing cycles; and effects of new legislation. This list can be expanded to reflect the client's own concerns and to include newly identified risks. These topics could form the core of a typical risk management analysis. It should be evident that a supplier will be unable to deliver an integrated, comprehensive review, and that insurance consultants will be too narrowly focused. After considering identified exposures and agreeing on the best methods to address them, review existing and future insurance needs. The industry delivery system was created 100 years ago, and the selling of products has changed little since then. There's some justification for this lack of innovation. The legal system, which will always have the last word on a policy's intent and performance, has specific interpretations from which insurers deviate at their peril. A knowledgeable in-house professional or risk-management consultant should be on hand to interpret the fine print. One type of risk that's often overlooked is the risk to a corporation's reputation. Whenever an intermediary is engaged to represent a company, it is essential that any material affecting the company's image or reputation be approved for release by a senior member or officer. I have seen marketing submissions ranging from slick, glossy, full-color, bound presentations (which sometimes say nothing or are full of mistakes) to one-page handwritten sheets (which sometimes say a lot). Insist on being represented in the marketplace as professionally as you feel is appropriate. If your current intermediary can't or won't conform to your objectives, it may be time for a change. Sloppy submissions create a negative attitude in the recipient and can affect the cost and scope of service or product. If you have never seen a proposal made on your behalf by an intermediary, ask to see some of their past presentations. Let us now turn to insurance renewals. Policy renewal negotiations should be started no less than four months before an expiration. The first month can be used to collect data and then prepare and approve the submission; the second and third months to discuss and negotiate with underwriters (and conduct background work, such as loss-prevention surveys); and the fourth month to make the presentation to the client, allowing for review and the decision. During this process, insist on communication; there should be no unpleasant surprises! If you are receiving negative feedback from the marketplace, especially incumbent insurers, ask to meet with them. If your intermediary can't or won't arrange a meeting, look closely at the client/intermediary/insurer relationship to determine the need for any change. Always agree with the intermediary representing your company on what is expected and what can be realistically delivered. Insist on follow-through. Whenever possible, arrange renewals together, or at least group coverage into property/asset protection and liability/casualty. Use these combinations, or your whole portfolio, to maximize leverage in your favor. Always consider the value of long-term relationships before terminating a carrier. Consider the carrier's attitude to claims in the past and whether you were treated fairly. If you had favorable experiences, it may be worth paying a bit more to maintain the relationship. Always remember that the provision of a risk management program should be viewed as a cooperative venture between the in-house buyer-counseled when needed by a true risk management professional, the client's chosen intermediary-and the insurer. Companies that were around during the products liability crisis in the mid 1970s or the capacity squeeze of the mid '80s experienced firsthand the effects of market cycles, probably with bitter memories. Currently, the insurance market is in an overcapacity stage, and the availability of coverage and capacity has produced a strong buyers' market. Predictions on how long this situation will continue range from 'It's going to get harder tomorrow' to 'This could last forever.' Personally, I believe that the marketplace has become so segmented that adverse results in one sector no longer affect another. For example, the aviation market, after many serious claims, reacted to its loss ratio with a dramatic upward rate swing in early 1991. In the future, we will see this type of reaction in other product lines. There can be an enormous temptation to buy everything available when rates are low, products proliferate, and limits are high. Stop and ask yourself whether you really need them. Explaining to the board of directors or management committee that you have purchased an incredibly broad insurance program at bargain- basement prices is fine-until the market contracts and you must either increase costs dramatically to maintain the coverages or make them unavailable. I am often asked whether direct writers are a viable alternative to traditional insurers who provide their products through an intermediary (insurance broker). The answer is yes and no. Before approaching any supplier, whether direct writer or broker, consider your needs. I believe that a client who has limited product knowledge needs an insurance broker or risk-management professional to interpret coverage and terminology and gauge the value of the service or cost combination. The problem with committing to a direct writer insurer is that the element of marketplace competition is removed and you will be restricted solely to the products of that insurer. However, direct writers often offer unique or specialized services called for by the complexity of risk-for example, loss-prevention services. It is doubtful whether any meaningful savings can be gained from eliminating the broker intermediary, since the direct writer has to pay its own sales, marketing, and account executive force. The key here, as in any transaction, is to become an informed consumer, or to engage the services of someone who is. In conclusion, remember that 'You don't know where you're going until you know where you're at.' To make informed decisions, you must have accurate data available detailing your own unique company history, as well as the relevant history of your industry to use as a benchmark. If you do not yet have this available, now is the perfect time to create a loss-tracking system to provide this essential database. Ask your broker and insurer to help create this database. There are reasons, and systems available, for generating this information. Always stay informed, and the benefits will exceed your wildest predictions....

How Policy Administration Software Supports Compliance Automation and Eliminates Risks
Compliance management drives insurance operations and shapes how companies create, manage and distribute policies. Insurance providers must navigate complex regulations that differ between regions, products, and customer segments. These rules keep changing. Insurers need to stay alert and ready to adapt. Insurance businesses encounter various roadblocks with manual compliance management. The overwhelming volume of regulatory requirements makes it impossible to manually track changes. Insurance professionals must watch for updates in multiple jurisdictions while managing their daily work. Complex legal language needs specialized expertise to interpret and apply to specific policy scenarios. Many insurers don't have this expertise in-house. That's why insurance businesses should prioritize implementing policy administration solutions with built-in compliance automation capabilities. Understanding Compliance Automation in Policy Administration Software Automated compliance systems optimize regulatory processes through technology-driven solutions. Modern systems monitor regulatory changes and apply them to policy operations automatically. Insurance companies now handle regulatory requirements proactively instead of reactively. A reliable policy administration system with compliance features has become crucial for insurers today. These systems form the technological foundation that helps companies stay compliant while they focus on their core business. Insurance professionals can now spend more time on product breakthroughs and improving customer experience instead of tracking compliance manually. Insurance policy administration software's capabilities go beyond simple automation. The system's rule engines convert complex regulations into executable business rules. Configurable compliance automation workflows adapt to each jurisdiction's requirements without coding changes. Immediate validation identifies compliance problems before policy issuance. Insurance policy administration systems also track every policy change and its regulatory triggers through version control. Technology has eliminated the gaps that manual compliance management created. Companies now have a competitive edge and greater confidence in their operations. Compliance Automation Processes Managed by Insurance Policy Administration Software Policy administration systems today use several automated compliance processes that optimize operations. These processes are the foundations of regulatory adherence and help insurers meet their obligations automatically. 1. Automated Regulatory Updates Integration Insurance policy administration software keeps track of regulatory databases in jurisdictions of all sizes. The system interprets new mandates and notifies stakeholders immediately. This technology converts complex legal texts into applicable rules and adds them to existing workflows. 2. Automated Policy Document Generation and Standardization Document automation helps carriers stay compliant by creating standardized policy documents that follow regulatory guidelines. The policy administration system's smart logic updates documents based on legal changes. This reduces risk and ensures that policies remain consistent in different markets. 3. Automated Premium and Rate Compliance Checks Advanced policy administration systems verify premium calculations and rate applications that match jurisdictional requirements. These platforms update changes in CRM, billing systems, and document storage without changing legacy systems. This ensures that rates stay consistent and meet regulations. 4. Live Audit Trail and Recordkeeping Advanced policy administration software generates robust, timestamped activity logs for each policy administration action. This activity log includes user identification, timestamps, action status, and additional codes. The system provides verifiable evidence of compliance controls throughout the policy lifecycle. When auditors request documentation, insurance teams can quickly generate comprehensive reports instead of manual accumulation of scattered records. 5. Compliance Automation in Claims Processing During claims management, policy administration systems enforce compliance through automated workflows. Advanced policy administration solutions enforce jurisdiction-based rules at each stage of claims processing. This ensures proper claim documentation, settlement procedures, and precise recordkeeping from initial loss notification to final payout. The claims compliance reporting automation eliminates the possibility of disregarding regulatory requirements during complex claims scenarios. Key Risks in Manual Compliance Management and How Policy Administration Systems Resolve Them Manual compliance management creates operational bottlenecks that policy administration systems equipped with automation capabilities can resolve effectively. Several critical challenges plague insurance businesses that rely on traditional compliance approaches. I. High Probability of Human Error Manual compliance management leads to mistakes in insurance operations. Even the insurance teams make errors like documents misinterpretation, missing regulatory modifications, or misplacing requirements. These errors can lead to penalties, reputational damage, and service disruptions. By implementing the insurance policy administration solutions, insurers can overcome these risks through automated validation, standard templates, and verification protocols. II. Lack of Immediate Monitoring Traditional compliance tracking can't keep up with changing regulations. Insurance teams often find regulatory changes after deadlines pass and this creates compliance gaps. In spite of that, advanced policy administration systems scan regulatory databases non-stop and alert teams about relevant updates to ensure quick implementation. III. Fragmented Data Management Companies without centralized systems spread compliance information across departments. This creates inconsistent rule interpretations and applications. Scattered data makes it hard to see compliance status clearly. Insurance policy administration systems create one source of truth, so all teams work with similar, up-to-date compliance policies. IV. Difficulty in Audit Preparedness Paper-based recordkeeping makes audit preparation complex and requires extensive time to gather documentation. Insurers need systematic audit trails that policy administration software creates automatically. This ensures extensive compliance action record maintenance. Final Words Policy administration solutions equipped with compliance automation capabilities eliminates the operational risks that plague insurance businesses using manual processes. Manual compliance management exposes insurance companies to human error, fragmented data management, delayed regulatory responses, and audit preparation difficulties. These challenges create compliance gaps that result in penalties, reputational damage, and competitive disadvantages. Automated insurance policy administration systems address these challenges through continuous regulatory monitoring, standardized documentation processes, real-time validation mechanisms, and comprehensive audit trail generation. Insurance businesses gain operational efficiency while ensuring consistent regulatory adherence across all jurisdictions and product lines. ...

Reservation-Of-Rights Letters: A Risk Manager's Guide
RESERVATION-OF-RIGHTS LETTERS: A RISK MANAGER'S GUIDE Reservation-of-rights letters often leave risk managers scratching their heads in shock and anger. What does the insurer mean? How should the risk manager react to the letter? How does one deal with gray coverage areas? This article examines some key facets of reservation-of-rights letters and discusses ways to react when one is received. 'Does a reservation of rights mean I have no coverage?' Not necessarily. It does suggest that a cloud hovers over your coverage. It signals that the insurer thinks there might be grounds to deny coverage for at least part of the claim. A claim can allege some counts that the policy may or may not cover, such as intentional torts, financial loss with no property damage or bodily injury, or a matter clearly outside the policy scope. A claim may include both covered and excluded matters. Months may pass before an insurer knows enough to tell whether coverage exists. Only a full investigation or trial might determine if facts support a denial of coverage. In the meantime, the clock ticks. Insurers must enter an appearance, hire a defense lawyer, and file an answer to the lawsuit. If an insurer does not reserve rights and defends a claim, but later discovers that 'questionable' allegations raise coverage issues, the insurer may be estopped from raising a coverage defense. Courts could say that by its acts, an insurer waived its right to deny coverage. Rather than deny coverage outright-a high-stakes gesture that might trigger a bad faith lawsuit- or proceed as though nothing was awry, the insurer seeks middle ground by ending a reservation-of-rights letter. The latter says in effect, 'We are investigating this claim but preserve our right to later deny coverage if investigation shows that it is not a covered loss.' Insureds cannot claim that the insurer, by its actions, led the policyholder to believe that coverage existed. As confrontational as reservation-of-rights letters tend to be, they steer insurers between the twin perils of total acceptance or total denial of coverage. Reservation-of-rights letters allow the insurer to keep its options open. If no strong coverage defenses emerge, it has not lost face. Reservation-of-rights letters give insurers more time to investigate a claim or unearth facts through the discovery process. Erring on the side of caution, an insurer can disclaim coverage if investigation reveals that the facts do not support coverage. There are several options for risk managers who receive reservation of rights letters. Ignore it. Maybe the insurer is correct in reserving its coverage rights. For example, maybe a suit seeks punitive damages and your policy clearly excludes them. Or perhaps your policy does not exclude them but your state law forbids coverage on public-policy grounds. In some cases, insureds and brokers report a loss simply for due diligence, or to test the coverage waters, not because they expect that the loss will be covered. Dispute the reservation. If you disagree with the reservation of rights, promptly go 'on record,' advising the insurer of your reason(s). This paper trail will be helpful if the case ends up in court. Maybe the insurer has misinterpreted a state law regarding insurance coverage for punitive damages. Or perhaps its interpretation of 'occurrence' is unduly narrow in light of policy language. Spell out your rationale, send it to the claims rep via certified mail return receipt requested, and set a deadline for a response. This turns up the heat on an insurer to reassess its position, or provide further insight as to whether you are on solid footing. Press for specifics. Some insurers believe that reservation-of-rights letters should be vague. The rationale is that this leaves the insurer with more options. Policyholders and risk managers should counterattack vaguely worded reservation-of-rights letters. Do not tolerate fuzzy letters that do not specifically refer to policy language and policy provisions, chapter and verse. Press for particulars. Start your stopwatch. Once an insurer has reserved its rights, it must eventually declare whether or not it is covering the claim. In other words, reservation-of-rights letters have limited shelf lives. An insurer must eventually get off the fence. If not, a court may decide the issue or an insurer may be estopped (through inaction) from using its coverage defenses, notwithstanding its reservation. Moral to risk managers: after receiving a reservation of rights, keep after the insurer periodically to either disclaim or accept coverage. Seize the initiative. Advise the insurer that after a reasonable amount of time you are entitled to a definitive stance as to coverage, or else the carrier is estopped. Be a nag! Recognize what new doors and options this opens. If the insurer reserves its rights, you may be entitled to hire a lawyer of your choice-not the insurer's-at the insurer's expense. When an insurer hires the lawyer and reserves rights, it creates a potential conflict of interest: the lawyer hired by the insurer may uncover some facts that if disclosed to the insurer might cloud coverage. To avoid putting lawyers in this position and to minimize the odds of mischief to policyholders, many courts allow insureds to retain their own counsel when an insurer reserves its rights. In California, for example, this has created a whole cottage industry of Cumis counsel, taken from the name of the court case. A reservation of rights might be a blessing in disguise, to the extent it opens the door for you to hire a lawyer who works for you and is not beholden to any insurer, but whose fee is still paid by the insurer! Insurers don't like this, but it may work out better for you in the long run. Seek a declaratory judgment action. This will get the coverage issue settled before proceeding on with the merits of the underlying claim. Do you need a lawyer? Again, the answer is, 'It depends.' If a company has an in-house legal department and has knowledge of the issues involved in the claim, maybe not. For a small business, seeking the advice of a lawyer may be prudent. If you and your lawyer feel strongly that coverage exists, you may want to seek a declaratory judgment. In fact, if the insured seeks a 'D.J.,' it can often influence the state, jurisdiction or forum where the court will hear the case. This is key, since some parts of the U.S. are much more congenial to policyholders and hostile to insurers. Thus, seeking a preemptive strike via a D.J. action may make sense to force an insurer's hand. The prospect of spending more legal fees to handle a D.J. action may also inspire an insurer to reconsider its coverage position, and it may even relent, seeing things your way. Sue the insurer for coverage and for additional damages. Consider this the 'nuclear warhead response.' First, though, make sure that you're actually in a war. An understandable question arising for policyholders receiving reservation-of-rights letters is, 'Do I need to seek legal counsel?' In lawyerly fashion, the answer is both yes and no. If you feel an insurer's position is groundless, capricious, or done simply to harass, then you can sue your insurer for bad faith, punitive damages, and breach of contract. Seek legal advice to determine whether you have a strong case. If your lawyer says yes, then raise the ante. Simply threatening to play this card may make the insurer sweat. Insurers do not make sympathetic defendants in courtrooms. They know this, and will often avoid the specter of a whopping jury hit and publicity black eye. If the reservation of rights is genuinely premised on a 'gray area' in insurance policy interpretation, then a suit against the insurer for money damages may not be viable. Still, recall that insurance policies are adhesion contracts, and courts usually interpret reasonable ambiguities in the policyholder's favor. Your idea of a reasonable ambiguity and the insurer's may not coincide, though. If you and your attorney feel the issue is black-and-white and that the insurer is reserving rights on specious grounds, consider a suit rooted in breach of contract and/or bad faith claims handling. Or perhaps-better yet -- threaten such action. Sabre-rattling will, at least, likely get the claim file bucked up the corporate hierarchy and may inspire some agonizing reappraisal on the insurer's part over its coverage stance. This is a use-only-in-emergency remedy, not one to deploy cavalierly. Once used, it may get your claim file off the desk of that adjuster trainee and into the domain of the V.P. of Claims, where cooler and more seasoned heads might prevail- in your favor. As drastic as this step is, it should be within any astute risk manager's armory. Look to your broker. Another question insureds may have is, 'Why didn't my broker notify me that this was coming?' Good question! Astute brokers will be attuned to coverage issues and will forewarn you of the possibility of an insurer reserving rights. Conscientious brokers will err on the side of caution in reporting a loss to a carrier if there is any chance of coverage. Acting otherwise might create an E&O exposure for the broker. Value-added brokers should 'prep' their clients in gray area coverage matters and guard against raising false hopes and unrealistic expectations. (Insurers also can try to cushion the blow before sending out the reservation-of-rights letter by phoning the risk manager or policyholder to explain, forewarn, and encourage open lines of communication.) Sadly, many brokers treat claims as an afterthought, and their involvement here is limited to demanding a faxed loss run from the incumbent insurer a few days before renewal. Astute brokers will add value to their service by Forewarning insureds as to the possibility-or likelihood-of a reservation of rights Discussing such letters with the insurer-preferably before they are issued Explaining to insureds in clear, understandable terms the meaning and import of a reservation-of-rights letter Functioning as the insured's advocate in the coverage matter, if the facts support that stance Advising the insured as to its options (see above) -- Extracting lessons from this episode to repair coverage holes and gaps in a pro-active way, come next renewal time Deciding whether a switch of insurers may be warranted One frustrating issue is that all insurers do not use uniform criteria when issuing reservation-of-rights letters. While in theory, any gray area coverage topic should trigger one, one insurer's ambiguity is another's clear issue. Some insurer claim departments or adjusters may neglect to issue such letters out of oversight, overwork, inexperience or plain difference of opinion. Other carriers are aggressive in staking out any coverage issue, challenging insureds or testing the outer limits of the coverage envelope. In fairness to insurers, it is no more realistic to expect all carriers to take the same position than it is to expect all attorneys to agree on a certain point of law or all doctors to agree to one diagnosis in the face of certain symptoms. An experienced insurance broker should be able to help alert you to those carriers that are hard-nosed on coverage matters and those that accommodate policyholders. When in doubt, the broker should practice preventive brokering by zeroing in on possible ambiguities and excising them from policies via endorsements, manuscript forms, or collateral letters of understanding. Unfortunately, in the zeal to sell, brokers can often gloss over possible sources of coverage strife and silently hope that they won't arise or that everything works out. Reservation-of-rights letters are a symptom of a possible coverage gap. To that end, wise clients will treat them as 'red flags' and opportunities to diagnose the health of their own insurance and risk management programs. New challenges bring new opportunities and, in this light, the policyholder can transform the coverage issue into a plan to patch up a possible 'hole' in coverage or consciously decide to retain or self-fund. In the Chinese language, the character for the word 'danger' connotes a double meaning of 'opportunity' as well. In a similar vein, reservation-of-rights letters carry overtones of danger, the danger of an uncovered loss. Viewed in a more positive light, however, such letters may flag an opportunity for companies to strengthen their own insurance and risk management programs, learning from the past to avoid future perils. This article originally appeared in the Risk Management Letter, published by risk management consulting firm Warren, McVeigh & Griffin, Inc. © C...ght 1994 Griffin Communications, Inc., Newport Beach, CA 92660. No reproduction without permission. (714) 752-1058.