How to look at Risk

Any business owner or home owner should look at Risk Management by asking 5 basic questions about the risks of possible losses:

1. How can I Avoid the Risk? Can you risk actually be avoided? When you are thinking about your potential risk of losses, can you actually just avoid the risk all together? For example, if you know cooking with your grill inside will likely cause a fire, then you could choose to cook outside instead. If you can avoid the risk, avoiding it may be better than buying insurance. A simple example of avoiding a possible Liability Loss is, Don’t Drink and Drive.
2. Is the Risk Controllable? Are there Risk Management Procedures you could implement that will control to potential of a loss? Great example would be Safety Wear for certain activities such as Glasses, Gloves, or Protective Clothing. When we mow our yard, do we wear the proper shoes, gloves, and eye protection to avoid an accident? If you can control the risk, you may not need insurance or as much insurance.
3. How much can you Retain of the Risk? Maybe you can’t avoid the risk, but you can limit it. When you know the risk exists, you can can calculate out how much of the loss you can personally Retain. Still the risk exists. How much you can Retain depends on the Risk, but one way is to raise your deductibles on your insurance policies or pay small claims from your own pockets.?
4. Can the Risk be Transferred? We can use contracts or help transfer the risk to another party. A good example is when you have a contractor working on your building, asking them to list you as an Additional Insured on their insurance policy will help transfer some of the risk to his insurance carrier. We also see this all the time when we rent vehicles. The rental company wants to transfer some of the risk to you by having your sign their contract. This helps protect the rental company’s assets, but it opens you up to a number of possible financial losses.
5. Can I buy Insurance on this Risk? This is the most common form of Transferring Risk to another party, but as you can see, it is not the only kind. Insurance is used to help reduce your financial loss when the other forms are just not possible or financially feasible.

As our culture evolves, new risks appear and insurance companies develop new products to address them. Each new risk will need to be addressed by using the questions above. Sometimes, you will be able to something about the risk without purchasing insurance; other times, the risk is so new that you do not know the potential of loss, so you purchase insurance to help protect yourself or your business.

If you have any questions about a potential risk, please do not hesitate to call and ask for guidance. We are here to help! Phone # (850) 476-3745.

Reid Rushing
McGraw Insurance Services

Commercial Drivers – Mobile Phones Usage Prohibited

Effective January 3, 2012 the Federal Motor Carrier Safety Administration (FMCSA) has issued rules restricting the use of mobile telephones while driving a commercial motor vehicle (CMV). This rule is for any vehicles over 10,000 GVW used for Interstate Commerce. Meaning any vehicle over 10,000 GVW that carriers products that may be shipped over state lines.

Summary of the Final Rule – 76FR 75470 (Effective January 3, 2012):

FMCSA and PHMSA are amending the Federal Motor Carrier Safety Regulations (FMCSRs) and the Hazardous Materials Regulations (HMR) to restrict the use of hand-held mobile telephones by drivers of commercial motor vehicles (CMVs). This rule making will improve safety on the Nation’s highways by reducing the prevalence of distracted driving-related crashes, fatalities, and injuries involving drivers of CMVs. The Agencies also amend their regulations to implement new driver disqualification sanctions for drivers of CMVs who fail to comply with this Federal restriction and new driver disqualification sanctions for commercial driver’s license (CDL) holders who have multiple convictions for violating a State or local law or ordinance on motor vehicle traffic control that restricts the use of hand-held mobile telephones. Additionally, motor carriers are prohibited from requiring or allowing drivers of CMVs to use hand-held mobile telephones.

This new rule does allow for Hands-free devices and phones or speakerphones if they can receive or make a call with the use of a single button and without having to reach for the phone.

A copy of the document can be found here.

Any violation of this restriction may result in a civil penalty on drivers in an amount up to $2,750, and civil penalty may be imposed on the employers, who fail to require their drivers to comply with this ruling in an amount up to $11,000.

Be aware that the government is looking for ways to make our roadways safer, and the increased use of cell phones and handheld devices are on the rise while driving. The intent of this new regulation is a good thing. I just hope it does not extend further in the future with increased regulation and governmental control.

If you need help in putting a cell phone use program together, please let us know and we can help you and your business.

Reid Rushing
McGraw Insurance Services

The “WHY” Question every business should ask

I love the website www.TED.com. This is a website for great speeches, articles, thoughts, and research on some of the greatest ideas, and it is FREE. I was shown this talk from Simon Sinek about “WHY”, and I think this is one of the most thought provoking ideas for a business.

The “WHY” has pushed men to provide and build since the age of man. You can see it in all religions, leaders and great companies. This story of “why” touched me. So then I read this article -

http://www.inc.com/kevin-daum/why-your-company-mission-doesnt-matter-to-customers.html

They talk about the “Why” does not matter anymore. I disagree.

I still think you “talk to” or advertise toward the people you want in your business. If you want people who are moved by the “why”, then you market toward the “why”, passion, desire, or whatever you want to call it.

There is a growing population of discontents in everything, so if that is the market you want, then the “why” will not matter, just the price or what it does for them. On the other hand, if you market your “why” to be for THEM, then you may have the best of both worlds.

I am tired of seeing the degradation of our society. We need more Steve Jobs that gives us our “why” or other great leaders/speaker that lead us back to a better society. I am reading “Think And Grow Rich”, and in this book they talk about many of the great leaders in the beginning of the last century (Edison, Ford, Carnegie, Schwab, etc.). What these people gave to society are things that will never be forgotten. They provided products or services because they wanted a better society. They had their “why” and they will be immortalized because of it.

“WHY” did you get in business in the first place? We are driven by our Passions and our Desires. With the money you earn by driving for your Passions, Desires, and Whys, you can also help change the world, but you have to be focused on “WHY” you are in business in the first place.

Anyone can find a counter to any talk/speech/mission, etc. We have the choice to listen and believe in what fits with our beliefs. I believe in the “WHY”… how about you?

Reid Rushing
McGraw Insurance Services

2011 – 2nd Costliest Year for Insured Losses $116B

Economic losses from natural catastrophes and man-made disasters were the highest ever in 2011, at $370 billion, while insured losses totaled $116 billion—the second-highest sum ever—according to Swiss Reinsurance Co. Ltd. The Japan earthquake and tsunami together cost the insurance industry $35 billion, while U.S. tornadoes added more than $25 billion in insured losses, Swiss Re said in a recent report.

10.  US – April Storms (1) – $1.5B in insured losses

9.    US – April Storms (2) – $2B in insured losses

8.    New Zealand – June Earthquake – $2B in insured losses

7.    Australia – Floods – $2.3B in insured losses

6.    US – Hurricane Irene – $5.3B in insured losses

5.    US – May Storms – $7B in insured losses

4.    US – April Storms (3) – $7.3B in insured losses

3.    New Zealand – February Earthquake – $12B in insured losses

2.    Thailand – Floods – $12B in insured losses ($30B in economic losses)

1.     Japan – Earthquake & Tsunami – $35B in insured losses ($210B in econmic losses)

This information comes from Business Insurance – (http://tinyurl.com/8x6psj4)

Citizen’s Surcharges and Assessment Liability Statement

I have written about this before (View Post), but now we are mandated to provide this information on all New Business effective May 1, 2012 and Renewals on June 1, 2012. I wanted to share with you this information directly from Citizens:

The Acknowledgement of Potential Surcharge and Assessment Liability statement has been amended to provide examples of potential assessment amounts for Citizens’ policyholders versus those with private insurance carriers. The change will be effective:

• May 1, 2012: new business
• June 1,2012: renewals

Personal New-Business Applications and Renewals

All personal lines applications and renewal notices will include the following after the Acknowledgement of Potential Surcharge and Assessment Liability statement:

Policyholder Assessment Example

To illustrate the potential assessment obligation of a Citizens policyholder compared to a policyholder insured by a private insurer, we have prepared an example based on an annual premium of $2,000. Your actual assessment amount will vary based on your annual premium. The assessment will be in addition to the premium you pay for insurance coverage.

	Citizens Policy	ABC Insurance Policy
If your annual premium is:	$2,000	$2,000
Tier 1: Potential Citizens Policyholder Surcharge (one-time assessment up to 45% of premium)	$900	N/A
Tier 2: Potential Regular Assessment (one-time assessment up to 18% of premium)	N/A1	$3601
Tier 3: Potential Emergency Assessment  (up to 30% of premium annually, may apply for multiple years) 2	$600	$600
Potential Annual Assessment:	$1,500	$960

Tiers are used to demonstrate the multiple levels of assessment defined by Florida Law. Assessment tiers are triggered based on the severity of the deficit.

Notes:

1. Tier 2 additional assessments may be incurred for other property/casualty policies that are subject to assessment.

2. Tier 3 assessment may continue for multiple years, depending on the extent of the deficit. In the event that subsequent years also generate a deficit, additional assessments could occur.

Commercial New-Business Applications and Renewals

All commercial lines applications and renewal notices will include the following after the Acknowledgement of Potential Surcharge and Assessment Liability statement:

Policyholder Assessment Example

To illustrate the potential assessment obligation of a Citizens policyholder compared to a policyholder insured by a private insurer, we have prepared an example based on an annual premium of $25,000. Your actual assessment amount will vary based on your annual premium. The assessment will be in addition to the premium you pay for insurance coverage.

	Citizens Policy	ABC Insurance Policy
If your annual premium is:	$25,000	$25,000
Tier 1: Potential Citizens Policyholder Surcharge (one-time assessment up to 45% of premium)	$11,250	N/A
Tier 2: Potential Regular Assessment  (one-time assessment up to 18% of premium)	N/A1	$4,5001
Tier 3: Potential Emergency Assessment  (up to 30% of premium annually, may apply for multiple years) 2	$7,500	$7,500
Potential Annual Assessment:	$18,750	$12,000

Tiers are used to demonstrate the multiple levels of assessment defined by Florida Law. Assessment tiers are triggered based on the severity of the deficit.

Notes:

1. Tier 2 additional assessments may be incurred for other property/casualty policies that are subject to assessment.

2. Tier 3 assessment may continue for multiple years, depending on the extent of the deficit. In the event that subsequent years also generate a deficit, additional assessments could occur.

If this does not scare you away from Citizens, I am not sure what will. I am glad that Citizens is forcing customers to understand the potential problems of purchasing insurance through Citizens, and the costs these potential assessments if we have a bad storm in Florida.

 

How to Identify and Stop Fraud

We attended a Fraud Seminar recently, and there were some great points made about Fraud that I wanted to share with you that helps explain WHY you should be concerned about Insurance Fraud, too.

Let’s first define Fraud to understand the intentions behind fraud.

1. Knowingly or willfully – The claimant or insured intended to deceive.
2. Concealing or misrepresenting – The claimant or insured lied or hid a relevant fact from us.
3. Material misrepresentation – The misrepresentation must be relevant, and be something that has an effect on the claims decision or the determination of coverage on a new or existing policy.

The Cost of Fraud is on the rise throughout the U.S. With the drop in the economy, we are seeing the increase in fraudulent claims. Here are some staggering statistics on the cost of fraud:

1. The estimated industry-wide cost of fraud is $80 billion per year.
2. Since 2008, premiums have risen 55.4% due to fraud.
3. Over the last several years, pervasive fraud in Florida’s no fault auto system has cost consumers over $800 million.
4. Tampa, Miami, Orlando and Hialeah counties have highest rate of questionable claims in Florida.

As an individual, you may wonder what you can do to help. There are a number of ways you can help cut the fraudulent activities. First, you can become aware and help other become aware of fraudulent activities. Second, you can report suspected Fraudulent Activities to the Florida Fraud Hotline (800-378-0445).

Being Aware of Fraud:

1. Staged accidents:
   1. No brake lights on front vehicle.
   2. Claimant vehicle is older and has prior damage.
   3. Overly enthusiastic witness.
   4. Single females or elderly drivers targeted.
2. Medical bill fraud:
   1. Unknown people soliciting for attorney or doctor.
   2. Always review your medical bills for accuracy.

Indicators of Fraud:

1. No proof of, significant lapse in, or questions left blank on prior coverage.
2. Full coverage requested on older vehicle.
3. Request for high policy limits inconsistent with lifestyle.
4. Address is a mail drop or P.O. box.
5. Application returned incomplete or unsigned.
6. Minimum amount paid on policy in cash.
7. Documents are hand-delivered, avoiding U.S. Mail.
8. Knowledge of insurance terminology.
9. Photos submitted in lieu of inspection.
10. Inspection reveals discrepancy in VIN.
11. Vehicle title or bill of sale not available.
12. Prior salvage record.
13. Street racers and aftermarket equipment.

Reid Rushing
McGraw Insurance Services
Pensacola Insurance at its best! I am here to serve You!

12 Key Facts About Classic Car Coverage | PropertyCasualty360

Here is a great article about properly insuring Classic Cars. If you have a Classic Car, you may want to talk to us about specific coverage for it.

12 Key Facts About Classic Car Coverage | PropertyCasualty360.

Reid Rushing
McGraw Insurance Services
Pensacola Insurance at its best! I am here to serve You!