INSURANCE MARKET UPDATE
The now forgotten soft market saw package policies grow as companies added more coverages to their policies as yet another way to compete for business when prices reached a floor. However, the hard market has brought an abrupt end to that practice, and coverages that once were given away now are being sold separately or may not even be available.
Equipment breakdown coverage was one of those included in many business insurance packages. "Now that programs are coming apart, there's a lot more emphasis on monoline equipment breakdown coverage," says Tony Capawana, vice president--eastern region--for Hartford Steam Boiler Inspection and Insurance Co. (HSB), a unit of AIG. HSB provides equipment breakdown coverage on a monoline basis through its agency plant of approximately 13,500 agents. It also offers it on a reinsurance basis, with the coverage being added to other insurance companies' business insurance packages.
Tony points out: "We're seeing a lot of business come back to us because of our emphasis on loss control. A lot of services fell off the face of the earth when the hard market hit. However, we continue to provide risk evaluations and inspections. That's always been one of our mainstays. Now that many businesses are having to pay for equipment breakdown separately anyway, I guess they're deciding that they might as well get some value-added services for their money."
HSB is unusual in that it has "more engineers than underwriters and they're all out there doing risk evaluations," Tony continues. "We still have the largest number of engineers in the industry and that, coupled with our long experience in the field, obviously is a big advantage. Technology is changing constantly and the value of equipment continues to rise."
The result is that the average amount for a property claim has risen, but property continues to be relatively easy to underwrite. "It continues to be pretty traditional. We either repair or replace the equipment," Tony points out, adding, "Business interruption has gotten far more complex. A new technology failure can have an impact on a business that is not straightforward and can be difficult to evaluate and determine the amount of a loss. At the same time, it's probably one of the most important coverages for a business to have. Many businesses have critical equipment, and a failure can shut the business down."
Need still not understood
"The need for this coverage still is not recognized by many agents and consumers," Tony notes, "particularly for lower- and moderate-hazard customers. We've been working with our agency plant to try and build awareness of the need. One of our agents said that the coverage reminded him of umbrella in that there's a similar challenge in explaining the need."
In addition to not always recognizing the need for equipment breakdown coverage, agents also are facing other obstacles. "They have a lot on their plate dealing with placement of traditional coverages in this hard market," Tony says. "It's pretty tough to deliver a big increase to a client and also recommend that they purchase another coverage. And, because of the increases in traditional coverages, cost also has become a factor with which agents must deal as well."
To deal with the increased interest in monoline equipment breakdown coverage, HSB has "gone back to a more traditional approach toward risk evaluation. We have an internal engineering unit that does telephone surveys. Physical inspections are only done on the highest risk businesses."
Baldwin Sadler offers brokerage facility for large truck fleets
Baldwin Sadler, a national managing underwriter specializing in commercial auto, has created a facility for writing large fleets of trucks in all states except Alaska and Hawaii. Fleets of 50 or more power units are eligible, including those carrying HAZMAT commodities.
Baldwin Sadler's fleet insurers hold A.M. Best ratings of A or better.
Producers can go to the company's Web site (www.baldwinsadler.com) for more information or call the company's marketing department: (800) 227-9040, extension 175.
Travelers Bond introduces new EPLI policy
Travelers Bond introduced Employment Practices Liability PLUS+®, a new policy that offers enhanced coverage as well as access to Risk Management PLUS+ OnlineSM, an employment practices loss control program delivered via the Internet. Among the new features are: coverage for damages measured by the value of employee benefits, including stock options; coverage for liquidated damages awarded under the Age Discrimination in Employment Act and the Equal Pay Act; coverage for additional employment claims including workplace harassment, violation of Family Medical Leave Act and failure to enforce workplace policies and procedures; and coverage for claims brought by independent contractors, leased employees and volunteers. The new policy also contains relaxed settlement features.
For more information, go to www.travelersbond.com. *