Insurance: Check Your Coverage
Insurance: Check Your Coverage
Do you have the right insurance for your business? Do your policies cover all your needs? SBCA is committed to providing component manufacturers (CMs) greater insurance management assistance so that each member has the right insurance coverage to protect all areas of the business. If you are looking for help assessing your policies or looking to cover your business at discounted rates, the specially-structured Lockton-AmTrust Insurance Program is exactly what you need.
A specialized structural building component insurance program is long overdue for our industry. “Coverage specific to the needs of the component manufacturer at a discounted and fair rate with a potential for a healthy dividend is what you will find with the SBCA Lockton-AmTrust Insurance Program,” said Mike Pateidl, Producer at Lockton Companies, LLC.
After generating quotes for a pilot group of CMs, Lockton and AmTrust aimed to address the key coverage gaps they found by focusing on five traditional lines of coverage: Property, General (Product) Liability, Commercial Auto, Umbrella, and Workers’ Compensation. Now, in partnership with SBCA, they’re offering to evaluate CMs’ coverage, generate competing quotes, and offer a thorough comparison of the existing and proposed coverage. In addition, the coverage offered as part of this program includes a high probability of premium savings, a unique benefit to apply industry expertise in the case of a claim, and a potential for dividend earnings.
Component manufacturer (CM) members of SBCA who are SCORE Members or SCORE Certified. A SCORE Member has purchased the SBCA SCORE Best Practices Subscription, is a plant in good standing, and is working toward SCORE certification. A SCORE Certified plant is a member in good standing and has completed the TTT program, the SBCA In-Plant QC Certification, the SBCA Operation Safety program or a comparable safety program, and sends out SBCA Jobsite Packages with every job. Learn more about SCORE.
Step One: The CM collects and submits company policies on Property, General Liability, Auto, Umbrella, and Workers’ Compensation to Lockton. These are documents that you should already have on file. “This amounts to 85% of the work on the part of the component manufacturer and from here, we take it piece by piece,” explained Pateidl. Lockton evaluates the policies to determine the current coverage, the existing gaps, improvements that can be made in coverage, claims made and cost comparisons. From this data, Lockton determines the percentage CMs can save on their annual premiums.
Step Two: The CM requests the last five years of claims history from their broker and submits that claim history to Lockton and AmTrust. You can acquire your claim history directly from your carrier or insurance agent. Lockton and AmTrust use your five-year claims history to calculate your loss ratio, which may be indicative of whether you’ve been using good insurance management techniques and industry best practices. Anything that has happened beyond a five year period does not affect your evaluation by Lockton and AmTrust.
Step Three: Lockton takes all the collected data, calculates the loss ratios, fills out all the forms, and sends a complete submission to AmTrust. In approximately two weeks, AmTrust provides a quote.
What do insurance carriers look for?
From an insurer’s perspective, the “past claims history is a good predictor of the future claims. Carriers make a profit at anything under 50% and they break even at 60%,” explained Pateidl. For example, a company pays $100,000 for its annual premium. The five-year claims history shows that the carrier has paid one claim of $40,000. Therefore, the loss ratio for the one year is at 40%. The loss ratio for the five-year period is 8%, projecting that prospective insured as a good investment.
What the insurance carrier does not want to see as it evaluates the claims history is any type of abnormal pattern. A one-time, unique accident during the five-year claims history can likely be explained and dismissed as an isolated occurrence. Frequent or repetitive claims over the five-year period indicate that insuring a company might not be a sound investment for the insurer.
Step Four: Lockton walks the CM through the premium comparison and explains all coverage terms and condition enhancements. Lockton breaks down the quote per line of coverage, comparing the old policy to the new policy under consideration along with the improvements in coverage.
If the CM chooses to accept the quote, Lockton becomes the insurance broker of record for those policies. The policies offered by AmTrust include three unique features that can save CMs money on premiums and on claims:
1. General Liability Savings with a Professional Liability Sublimit. The General Liability (GL) line of coverage is typically where program participants see the greatest savings. AmTrust’s policy includes a special sublimit within the GL coverage that provides defense for a Professional Liability (PL) claim. This PL sublimit can be included on the certificate of insurance you provide to your additional insureds.
2. Potential for Dividend Earnings. Once the asset threshold of $1 million in total premiums is met by the entire SBCA program, participants earn a dividend from AmTrust. For example, if after two years AmTrust calculates the loss ratio by line of coverage at 0%, a CM would get back 18% of its annual premium. Dividends slide from 18% at a 0% loss ratio to 0% at a 60% loss ratio.
3. Applying Industry Expertise in Case of a Claim. The unique benefit of applying industry expertise early in every material claim is part of SBCA’s commitment to providing value to all CMs in the program. The goal is to evaluate the claim details and help create a roadmap to manage the legal aspects of the claim and then to reduce the cost of the claim to a minimum. Immediately upon receiving a notice of a claim, Lockton will work with SBCA and its legal counsel to evaluate and discuss claim strategies that can be provided back to the insured and AmTrust. This expertise is implemented immediately on behalf of the CM upon receiving a notice of a claim and will facilitate efficient and cost-effective handling and management of the claim.
How is General Liability coverage calculated?
Factors affecting General Liability (GL) coverage include the volume of business conducted and the state in which a CM operates and sells. Carriers determine rates and file them with the state, so GL numbers do vary by carrier among states because some states tend to award more money during claims litigation than others. For example, GL coverage is more costly in California than it is in Kansas.
Request a Quote Today
Due to the amount of background work that needs to be done, Pateidl recommends CMs request a quote four to five weeks before each policy expires. When policies of the various types of coverage expire on different dates, Lockton suggests that CMs ask for quotes to line up all renewal dates together.