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... 1. Would you recommend this company? 2. What about this company do you like/dislike? 3. Why did you choose this rating? Submit This Anonymously Submit Cancel Contact Us contact_phone Click to call Unfollow First name: Last name: Email: Are you sure you want to deactivate your CompleteMarkets Company Profile Deactivate Cancel Loading.. About Us Services Jobs PR Newsletters Employees Articles Blog Photos Group Connections Reviews IMMS Library Immerse yourself in our stacks. Take some time and browse through our library. We have thousands of articles, checklists, tip sheets, sales letters, and more! Communications Marketing Customer Service Planning Finance/Accounting Risk Management Human Resources Selling Legal and E&O Technology Life/Financial Services Glossaries Management Resources & Links Categories Popular Recent All Back Personal Planning: Distinguishing Reality From Interpretation 6/2 /2014 12:00:00 AM by CompleteMarkets Editor , Tom Markley This content has not been rated yet. 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 ...

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. ...

A Look At Value Added Selling As An Answer To Price Selling
A LOOK AT VALUE ADDED SELLING AS AN ANSWER TO PRICE SELLING by Allen Karlin, Ph.D. Use these proven ways to stand out from the competition. One reality of today’s business climate is that price is of critical importance when clients make a decision about where to buy their insurance. Rates and prices constantly are being examined by agents, risk managers, and prospects. Due to significant competitive and economic pressures, clients are looking to save money wherever they can. Agents must be aware of the concept of value-added selling: the need to set yourself apart from competitors so that prospects and existing clients view you as a business partner of the highest quality and integrity. Value-added selling can be defined as the entire package of goods and services that you, as an agent, bring to a prospect or client. The package extends beyond you, however. It also includes the agency and its reputation; the support it provides; the carriers you use, their products, and specific advantages those products offer; and the level of claims service provided. In short, there is a price associated with any insurance policy. And sometimes the cost of doing business may take a less expensive policy at the outset and make it the more expensive purchase in the long run. For example, a heavy-equipment manufacturer normally would require a high level of loss-control services. If he or she chooses the lowest-priced insurer and the services provided are inadequate, he or she will suffer down the road. If you can’t offer the lowest price, differentiating yourself, your agency, and your product provides the key to making value-added selling work. Finally, if you find yourself in a situation in which price is all that matters, be positioned to get the “last look” as a result of having done an excellent job of setting yourself apart. STANDING OUT FROM THE CROWD To differentiate yourself from your competitors, ask yourself these basic questions: “Who am I?” and “What do I have to offer?” The first answer most agents give is “service.” This is a very comprehensive and subjective term. Service may mean fast turnaround on policy issuance, returning phone calls on the same day, looking for coverage changes and potential pitfalls, keeping abreast of information that may affect clients’ businesses, fast claims service, or friendly and courteous phone service, etc. In practice, the meaning of service may vary for every client and prospect. How does the motivated agent differentiate what service means for his or her prospect? Ask! Ask is the most important three-letter word in the English language. If you don’t ask, you won’t be sure you know all there is to know. In order to provide what the client or prospect wants, and whether you want (and can afford) to provide it, you need to ask what the buyer means by service. For example: “Which aspects of service are especially important to you?” “We find that many people switch agents because they’re dissatisfied with the service they receive. Are there any areas in which you have been less than satisfied?” (If the response is positive, follow with, “Can you tell me what happened?” And if it’s not obvious from the story, ask, “What impact did that have on you?” or “How did that make you feel?”) This puts you in a position to empathize with the customer or prospect (e.g., “No wonder you feel that way; if it had happened to me I’d feel exactly the same way. If you were my client, here’s what we would have done for you . . .”). If the person you are speaking with is your client and is complaining about your service, you still must listen and empathize. Then ask what it would take to fix the problem and negotiate from there. However, not all clients will be dissatisfied with the level of service they receive. How often do you hear, “I’m really satisfied with the service I receive,” or “My coverages are fine, thank you.” In these situations help the prospect understand that his or her current agent never really defined service because that agent didn’t ask what was important to the client. If prospects say they are satisfied with their current service, define what level of service they currently receive and then raise their level of expectation regarding the service they should be receiving. In other words, ask the right questions so that the insured wants to receive the next higher level of service. For example, a smaller prospect with a premium of $2,500 says he or she is satisfied with the level of service received. You might ask when the last time his agent visited his business. He tells you it was three years ago, when the policy was first sold. By his voice you can tell that the insured is asking if there’s something unusual about that. You then can ask when and how often the insured sees the agent. Quite often the response you will get indicates that the insured does not expect to see or have visits from the agent. This insured has fallen into “programmed thinking” regarding his agent. Because he has a business to run, and probably a few hundred other items keeping him busy, he doesn’t spend time thinking about how he can obtain better service from his insurance agent. Part of differentiation is asking questions designed to help someone break that pattern of thinking. Through your questions, a prospect may suddenly ask why he or she has accepted less from their current agent than they do from other vendors. Since you raised the issue in a tactful manner, suggesting that you do business in a different way, you are well-positioned to be the beneficiary of that new thought process. You earn the opportunity to prove what you can do on the insured’s behalf! Other questions you can ask to help redefine acceptable service levels include: How much mail or phone contact does the insured receive from his or her agent? (This helps define the agent-insured relationship.) Does the insured speak to the agent or to a CSR? Does it make a difference to the insured, and does he or she prefer dealing with the CSR? The goal in differentiating yourself through service is to illustrate to both current clients and prospects how your attention to what they consider important will save them time and, in the long run, money. They will realize that each time they don’t receive the service they want, the follow-up time alone may be expensive, raising their frustration level. Your success at differentiating yourself will depend on your ability to: • Discover specific client needs • Influence decision-makers • Formulate strategies to fill client and prospect needs • Form market relationships • Emphasize strengths and improve weaknesses • Relate to client and market needs • Exploit the expertise you bring to the relationship • Network • Troubleshoot problems • Identify opportunities and analyze signals • Analyze selling situations &bull...sp;Train support staff to satisfy customer needs • Innovate potential solutions • Overcome objections and obstacles • Negotiate with clients, prospects, and markets PRODUCT DIFFERENTIATION Product differentiation is a second area in which agents can showcase the products they sell and the companies they represent. The No. 1 rule here is Know how to read and interpret coverages. This example helps to illustrate the point: A producer had developed such good rapport with a prospect through active questioning and listening that she was shown her competition’s quote. The competition was $2,000 less on what seemed, on the surface, to be a similar policy. Upon closer examination, the producer, who had the last look, realized the policies differed on prior-acts coverages. She was offering full prior-acts coverage, which was not provided by the competitor’s policy. The competitor’s policy easily could have cost the insured an amount far greater than the $2,000 difference in price. It pays to be able to read and interpret policy terms and conditions. In this example, the producer was able to point out the difference in coverage and ask if the potential loss, which would probably exceed the $2,000 premium difference, was an acceptable risk to the client. The answer was no. She had differentiated her product by illustrating the differences in coverages she uncovered, and she received the order. Knowing how to read coverages and how to take apart a policy and recognize real differences in what is covered by different forms and contracts is critical to your ability to neutralize price as the sole buying criteria. Some policies have exclusions written into the body of the contract while others appear as separate endorsements. Still others are written in such ambiguous language it would require the assistance of a roomful of attorneys to provide a halfway-workable interpretation. If you need to strengthen your skills in this area, consider these solutions: • Find someone in the agency to teach you. • Spend more time with your company underwriters and ask more questions. • Ask the market underwriter to interpret policy terms and conditions (this has the added benefit of building your market relationships so you can better present risks to that market). • Participate in insurance classes or self-study programs (CPCU, ARM, IIA, etc.). • Take insurance classes at a local college or junior college. • Attend classes conducted by market personnel (when promoting a new product, often there will be a comprehensive comparison to the competitor’s products), thereby making your job in the field even easier. Auditing coverages for clients or prospects as a method of gaining business has proven successful. Consider the credibility and relationship you can establish, not to mention the powerful motivation for buying you can provide, if you were to audit a prospect’s coverages and discover: • four different policies, many with overlapping coverages, which could be replaced with two policies of lesser cost. • different “other insurance” clauses leaving the insured with potentially inadequate coverage and a lawsuit to interpret the policies, should a loss occur. • glaring gaps in coverages. • inadequate limits. • use of a claims-made form when an occurrence form is available. • exorbitant deductibles or self-insured retentions (SIRs). • unrated carriers. Unfortunately, it is not always this easy. The competition may be doing a good job of handling the account. Additional questions to uncover areas important to the prospect are essential here. Sometimes you need to change the pace and take a new direction. One strategy used to overcome current economic conditions and pricing barriers is called “unbundling.” Unbundling, which should be used for larger and more sophisticated accounts, refers to removing specific services or items from the policy so that the prospect does not have to pay for them. Here’s how it works: When determining rates for exposures, insurance companies take into consideration not only the losses they will have to pay, but many other incidental services that add to their overall costs. These services include exposure analysis surveys, claims administration, and actuarial analysis of loss experience. Many of your large and sophisticated prospects either have the capacity to perform some of these incidental services themselves or have turned to specialists to provide them. So, they do not need to purchase these services as part of their policy. As a result, some carriers are providing quotes on an unbundled basis by pricing a risk based only on those services the insured sees as necessary. While such situations usually apply to larger accounts, unbundling does offer an opportunity to compete strictly on price. However, be careful not to eliminate a service that a client needs. Taking unbundling to an extreme to get your price down can open your client to an uncovered loss and open you to an E&O claim. When careful analysis indicates unbundling to be justified, you can save significant money by having the insured purchase comparable services from outside sources (e.g., contract claims administrators, risk control specialists) or by providing these services internally utilizing their own employees. Other ways to offset pricing include developing an understanding of supplemental services, which may not be provided by prospects, or other price-sensitive strategies that you can use in highly competitive situations. Examples include loss-control services, flexible payment plans, utilization of deductibles, manuscripted endorsements, and policies and customized coverages. Since rates and prices probably will continue to be examined carefully by agents, risk managers, and prospects, it’s important to consider ways in which you can either meet or offset concerns about price. Use the concept of value-added selling to set yourself apart from competitors. Be creative in providing services clients want and need. Explain the benefits and drawbacks of various solutions to their insurance needs. Use your relationship-building abilities to gain an understanding of those client and prospect needs as well as to get the “last look” in competitive situations. Allen Karlin is president of Karlin Management Resources, a sales and management consulting firm. He can be reached at (310) 394-1770 or ajkarlin@earthlink.net

... (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....

... the Family and Medical Leave Act of 1993 or any other similar state or local statutes, rules, or regulations to the extent that they prescribe responsibilities or duties concerning the same acts or omissions. Because responsibilities and duties that are excepted from an exclusion are listed, the resulting list might not completely address all the laws for which the insured may be found liable. Furthermore, such an approach might not contemplate changes in the law or entirely new laws coming into effect. These concerns are partially assuaged by the inclusion of a qualifying statement that makes an exception for any other similar state or local statutes, rules or regulations to the extent that they prescribe responsibilities or duties concerning the same acts or omissions. Although this qualifying statement reduces the impact of the exclusion, the statement may be open to differing interpretations. Narrowly construed, it might broaden the exclusion to the detriment of the insured in respect to laws not specifically listed, new laws, or changes to existing laws. Strikes and Lockouts The ISO strikes and lockouts exclusion reads as follows: Injury' to any striking or locked-out employee, ' or to an employee' who has been temporarily or permanently replaced due to any labor dispute. While many EPL insurance policies contain a strike and lockout exclusion, the ISO exclusion encompasses claims based upon injury not only to striking or locked-out employees, but also to employees who have been temporarily or permanently replaced due to any labor dispute. The phrase any labor dispute' could conceivably encompass any kind of dispute in which an employee was fired and replaced. Such an interpretation could severely limit coverage. While ...

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....

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.