Author Archives: Bill

Advocacy: The Great Freeze

Last month San Antonio and South Texas had a very unusual and out of character ‘freeze’.  To my friends in the northeast, our definition of a snow day is comical compared to the severe weather they endure, however once every five years, south Texas decides it is cold enough and there is enough moisture on the ground to justify closing the schools for a day or two.

The particular weather incident lasted for a few days, and we had several clients that had the usual claims of frozen pipes.  But a few had problems with their swimming pools and the related equipment, which begged the question of whether the homeowners policy would respond to a pool related claim.

The first claim report that went to a national carrier was quickly denied under the terms of the exclusion in the homeowners policy that is specific to “damage to swimming pools”.  However, the exclusion does not specifically reference the related equipment used to operate the swimming pool, but just the pool structure itself.

The Personal Lines Team Leader at Texas Associates, in collaboration with our state insurance association researched the issue and provided the necessary documentation and information to the national carrier adjuster to have them reverse their opinion. 

Choice, Customization and Advocacy are the hallmarks of our culture at Texas Associates.  Placing insurance coverage for clients is only part of what we do.  Understanding coverage and advocating for our clients at the time of a loss is what you can expect from our team.

Should you want more information on how we can partner with you, please call our office.

Risk Resolutions for 2011

New Year’s Resolutions are a tradition in many households, including mine.  Establishing personal & professional goals for 2011 is something I encourage my colleagues to do as well.

By now most businesses have completed their 2011 budget, decided on capital expenditures and have somewhat of a roadmap for 2011.  However, few take the opportunity to access their risk tolerance or exposure in the coming year, most stopping with the evaluation of insurance premiums and its impact on the 2011 budget. 

What level of risk is your firm interested in taking this year?  How strong is your balance sheet, should you have an uncovered or underinsured loss?

At Texas Associates, we proactively work with our clients to evaluate their total cost of risk, which is more than just the cost of insurance.  In fact, in some cases spending money on contractual risk transfer or internal safety programs may be a better investment than just relying on an insurance policy to protect a firm. 

The economic indicators for 2011 all point to growth for many industries.  Having a plan to manage your total risk in this market will be essential to succeed.  So did you make a list of risk resolutions for 2011?  Are you comfortable that an uninsured loss can be absorbed by your anticipated cash flow?

If your agent simply brought a proposal to you and talked about the cost of insurance in 2011, without addressing your risk that is on the horizon and prioritizing your risk resolutions for 2011 give us a call.  Your firm deserves more.

Get in the Game!

In three weeks every one of you will be able to speak your peace about what is going on in Washington as well as your own community.  Election day is Tuesday November 2, 2010 and should be underlined on every calendar in America.  Regardless of your political affiliation, exercising your right to vote is one of the great privileges we enjoy in this great country.  Sadly, less than half of the registered voters participate in federal elections, with that number being even lower for local races.

There are some significant issues facing our country and our local communities.  At Texas Associates we encourage the members of our team to not only vote in each and every election, but to get involved with a candidate or cause.  A true representative democracy can only exist when the people not only voice but exercise their feelings and beliefs on election day.  Researching, identifying then voting for your choice for elected leadership is something we all should embrace.

So this November 2, get in the game.  Exercise your right to vote, and make a difference in Washington and at home.

What is in your house?

This past week the San Antonio Express News (http://www.mysa.com)  published an article describing claims suffered by  several homeowners that had been denied in New Orleans.  The content claims were flood related, and the accusation or criticism was against the National Flood Insurance Program (NFIP).

According to the article, the claimant had submitted a supplemental list of items that they lost in the flood to the carrier.  The NFIP claim adjuster asked the homeowner to provide original receipts of the items in order for the claim to be processed.  Now, lawyers have been engaged on both sides to try and settle the dispute. 

I don’t know the circumstances of the claim above, but several thoughts come to mind.  First, I hope the policyholder’s Trusted Advisor is helping them resolve the issue.  At Texas Associates, advocacy is the most important thing we do for our clients.  At the time of a claim, particularly a catastrophe, most policyholders are struggling to put their life back together and the burden of dealing with a claims adjuster can be frustrating. 

The second thought was, what in the heck is in my house and do I have the original receipts? 

As a Trusted Advisor to a number of personal lines clients,  we remind our customers to specifically schedule jewelry, fine arts, guns and any item of value or significance.  If your home is furnished like ours, it is an accumulation of items over the years, some of which are handed down thru generations.  To the surprise of many insurance carriers, original receipts just aren’t available or are difficult to secure. 

There are a number of risk management tools that can be used to inventory household items.  But one of the easiest tools may be attached to your hip.  Almost every cell phone manufactured today has a camera feature.  For those items that you have not specifically scheduled, take a picture of them and keep those records in a safe place.   Or even better, take a few minutes to video record the inside of your home, paying particular attention to antiques or those items of value that may not be scheduled.  On the video mention the item, its history and an anticipated value.

Copies of the video or pictures taken can be kept in the office of your agent or broker as well as off site in a lock box or secure location. 

If you have questions about what should be specifically scheduled on a homeowners policy or what should just be separately inventoried, call our office.  This simple exercise will help should you find yourself in a situation like the people interviewed in this article.

401K Retirement Plans

Many leading economist have stated that the most recent financial crisis in America was caused in part by the obsession of individuals and corporations with spending and their lack of savings or ability to save.  The leverage felt by Americans from credit card debt alone is staggering.  When it comes to retirement savings or planning for retirement the outlook is even more grim for some. 

A recent study published by the ASEC discovered the following:

  • Only 57% of those not retired say they are saving enough for a retirement with a “desirable standard of living”.
  • An important reason for inadequate retirement savings is the failure or inability to “save for retirement at work through a 401(k) or other contributory plan,” which only 55% of the non retired report having.

There is a perception by business owners (particularly small business owners) that a 401k plan is expensive and complicated to put in place.  Neither is true.  At Texas Associates, we recently helped a client put a plan in place for less than $1,000 a year in administration cost, and it only took 60 days to put in place. 

Keep in mind that a 401k program is not necessarily an investment plan, but a forced savings plan.  With the help of a Trusted Advisor, a firm can put a variety of investment products in place that can cater to the individual risk/reward strategy of your employees.  Not only can a 401k plan be a value added benefit for your employees, it will be a required tool to recruit new talent to your firm, particularly if you are in a market that has to compete with larger employers. 

Outside of the financial reward and gain that employees will appreciate as a result of a 401k plan, as an employer we have an obligation to help those that work for us plan for the future.  A “forced savings” plan just might be the way to help many in this country make better use of their finances and start thinking about their future. 

An employee with a better financial outlook for the future, will make for a more productive employee.   If you have additional questions about employee benefit plans or 401k opportunities contact your Trusted Advisor or our office.

Property Values vs. Insurance Policy Values

This past week I was with a client who was frustrated by the value an insurance company had mandated on his property for insurance purposes.  This particular insurance carrier calculated a number in excess of the market or resale value of the property.  His comment was, “I’ll gladly sell them the property for that value”.     

With the real estate market soft in most parts of the country, it is not surprising that policy holders may be frustrated as my client was, or at a minimum confused by the appropriate limit of insurance to have on their building or home.

Most property policies have a coinsurance provision(typically 70%, 80% or 90%) which keeps you from insuring a property for just any value without suffering a penalty.  At the time of a partial loss, the insurance carrier will identify the coinsurance provision and make a calculation based on the provision percentage.  If you haven’t insured the property “adequately” as defined by the insurance carrier a substantial penalty could be assessed to the claim. 

For example:  Let’s say a property is insured for $500,000 and there is an 80% coinsurance provision on the policy.  After a partial fire loss $300,000 the claims adjuster determines that the replacement cost value on the building should have been $1,000,000.  The insurance carrier would value the loss settlement at $187,500 less the policy deductible.  A $112,500 “penalty” would be not be well received by the policyholder.

The simple calculation is:  DID/SHOULD * Loss = Claim Settlement

In other words, the adjuster will determine what you DID insurance the property for ($500,000 in our example) divided by what you SHOULD have insured it for ($1,000,000 x .80=$800,000).  That factor multiplied by the loss amount is the penalty.

At Texas Associates we are not property valuation experts, but we do understand how property insurance policies work.  As a Trusted Advisor to thousands of property owners, we work every day to help our clients understand the products they are purchasing and ways to protect their assets.  There are a number of solutions to the problem outlined above,.  Call your Trusted Advisor or our office if you want to make sure you aren’t the victim of a coinsurance penalty.

Economic Slowdown

This past week I attended a luncheon where the speaker was a leading economist out of New York.  The title of his speech was Economic Outlook:  Midyear Slowdown.  Many experts in his field predicted steady growth for the remainder of 2010 with a slowdown coming in early 2011.  This particular economist pointed to the following factors that caused the earlier than predicted arrival:

  • The BP Oil Spill in the Gulf
  • European Turmoil
  • The Healthcare Bill
  • Financial Reform
  • The Stock Market Drop

The bottom line on each of these issues is uncertainty.  Not knowing how dramatic each of these major issues will impact business in America has created the economical stall.  The only guarantee is that every business in America will be impacted somehow by one or more of these changes.

At Texas Associates, we attempt to arm our clients with information beyond just insurance.  We aren’t economist, but I have heard one of our partners often remind clients………”Think beyond the next job.  Try and plan today for what your risk concerns will be 18 months from today.”  Every business owner should be prepared for the following over the few years:

  1. Credit markets will remain to be tight, particularly for middle market businesses.
  2. For those fortunate enough to be able to borrow money to grow their business, the cost will be greater and terms challenging.
  3. Healthcare cost will increase, both in terms of premiums and administrative cost to the insured.
  4. The environmental concerns of the BP disaster will restrict capacity for insuring those risk, and more onerous contract language is certain to be imposed on businesses, particularly contractors.   

None of the issues outlined above will keep our clients from overcoming the short-term challenges that lie ahead.  Our pledge and obligation is to help them navigate thru what is on the horizon and arm them with the resources to mange the related risk. 

If you don’t have a Trusted Advisor on your team, call our office.  You will need one for the remainder of 2010 and beyond.

The BP Business Income Lesson

The news this week is that BP has “controlled” the leaking of oil into the Gulf of Mexico thanks to the attachment of an experimental cap.  Although the problem is not solved, it is definitely the first good news we have had in weeks since the tragic explosion at the Deepwater Horizon platform. 

According to the official BP website, as of July 20 119,000 claims have been filed, with over 73,600 checks written since May 3 to claimants.  The experts are predicting the total claim cost to be in the billions of dollars, not including the environmental impact to the coast of Louisiana.  Some say that part of the country will never recover. 

I have read with interest claims against BP being made by businesses as far north as Chicago and as far west as San Francisco.  These are companies that cannot get products from various suppliers in Louisiana, specifically food related enterprises that rely upon seafood from that part of the country.  The claim in several of these cases is loss of income because of a lack of supply or inferior supply of product. 

Because of the way most business income insurance policies are written, there would not be any coverage available from the claimants insurance program.  There was not an “event” that would have triggered a loss.  Only time will tell whether or not BP will compensate these businesses, but it raises an interesting set of questions:

  • Is your business dependent upon a third-party for the majority of goods and services you supply and how vulnerable are you should a catastrophic event happen where they are located? 
  • How would your business income and extra expense policy respond to a BP styled claim?
  • What is your contingency plan, should one of your vendors suffer a natural disaster or financial disaster?

No one wants to see another BP styled catastrophe.  But just to be safe, visit with your trusted advisor or call our office to see how you can better manage this important business risk.

At Texas Associates we work diligently with our clients to help them manage their risk rather than just help them purchase insurance.

Trusted Choice: More than a Brand

At Texas Associates we are a Trusted Choice Agency, which means we are dedicated to partnering with our clients to not only provide a product, but a promise:  Choice, Advocacy and Customization!

As an independent agent, we represent a host of national and regional insurance carriers.  Part our commitment to our clients is to provide them options and choices when it comes to insuring their homes and businesses.  We work for the client, and not the insurance carrier.

Advocacy could be the most important thing we offer our clients.  Whether at the time of a claim,  to properly underwrite a risk or even during the legislative process our clients rely on us to protect their interest.  Insurance is an economic generator in every state, and without a strong insurance advocate many business owners would be unable to manage the risk and grow their respective businesses. 

There are no two business or risk alike.  In order to properly insure a business, a broker must first understand the nuances of the business then have the leverage and clout with the insurance carriers to manuscript or clarify the intent of coverage for certain situations.  Customization is critical to building a risk management and insurance program for those entrepreneurs looking to take their business to the next level.

Insist on the Trusted Choice characteristics from your broker, or call our office if we can be of help.

To find a Trusted Choice agent in your area go to www.trustedchoice.com

Claims: To Report or Not to Report

Most of our clients at Texas Associates ask the question of whether to report each and every claim incurred by their firm or family.  The hesitation of course is that the number of claims will eventually lead to higher premiums at renewal or even worse, the dreaded non-renewal notice sent from an insurance carrier because of a claim or series of claims.

As the Trusted Advisor to thousands of business owners, we encourage each of our clients to do their best to put controls in place to mitigate claims.  As part of the services we offer, we work with clients to determine their interest and ability to sustain a loss and a comfortable deductible or retention figure for the claims that are most certainly on the horizon. 

The advice we give on reporting claims closely mirrors the net result of the evaluation described above.  However, in the following situations always report a claim regardless of your level of retention:

  • A workers compensation claim involving soft tissue injuries
  • An automobile accident where the automobile is not driveable or injuries are alleged or incurred by a participating party.
  • Property damage as a result of a catastrophe.

If you are uncertain about what level of retention your firm or family should retain, feel free to contact our office.  At Texas Associates, we strive to help firms manage their risk today, and help them prepare for the catastrophe event that  may be around the corner.

Don’t worry about how the insurance carrier will react to a claim filed.  Count on your agent or broker to help you thru that process.