The best kept secret of the municipal property and liability market remains, the majority of municipal entities in Pennsylvania are under insured and over paying for coverage options which they have not recently validated as appropriate to protect their assets against potential liabilities.
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.Today we will discuss the “nuts & bolts” of preparing your municipality to take its Property & Liability coverage’s to bid allowing you to lower your expenses and increase your coverage.
During the past several weeks, we have discussed the benefits all municipal entities can achieve by performing a coverage review with their current property and liability carrier as well as examining your individual loss history. Additionally, we examined multiple common sense approachs to cost effectively research potential alternative carriers you may decide it would be appropriate to solicit coverage bids from. Last week we briefly examined the major types of coverage carriers available in Pennsylvania and how they effectively serve their members.
In summary, the more information you can obtain concerning your current coverage, your claims history, and how those needs and coverage objectives are best served by carriers throughout the Commonwealth the greater your opportunity is to obtain the most appropriate comprehensive coverage which is economically possible. I promised there would be no commercials and that promise will again be kept.
What I will ask you to buy is, “the most appropriate comprehensive coverage which is economically viable!”
In making the decision to “insure” your respective municipal entity has the coverage you need at the most economically viable cost, you need to give yourself sufficient time to prepare yourself to go to bid. With the majority of municipal property and liability insurance bindings expiring January 1, today is an appropriate day to begin the bid process.
It is not unusual to find it will often take several weeks to obtain your loss runs. What you need to make sure is, you have your claims history commonly known as your loss runs in hand as soon as possible. What you cannot afford to do is wait to begin the search process for alternative carriers while waiting for your loss runs or coverage review. For the majority of local government entities, in the interest of saving time - eliminating multiple meetings - you can schedule your coverage review with your broker for when they anticipate your loss runs will have arrived.
As I said before, there will be no commercials but I want to clear up a common misconception with your indulgence. The fact that you are soliciting alternative coverage options does not mean you need to switch insurance brokers.
While it is true there are insurance coverage providers who require a broker to be exclusive representatives, that one time traditional business contract is the exception today not the rule.The majority of the members I have underwritten since 2002 were placed in the pool by brokers who continue to represent multiple additional insurance coverage options for Pennsylvania municipal government entities. As such, your current broker can be a major asset to you in taking your Property & Liability coverage’s to bid.
Conversely, if you have researched coverage options which your broker cannot access as an appropriate market, the fact you are already an informed consumer with the majority of your documentation in hand makes you to many carriers a dream come true. Few lines of insurance have an application to binding ratio than Municipal Insurance coverage.
The municipality which solicits a bid for appropriate comprehensive coverage aware of the implications of its risk hierarchy implications from analysis of its internal operating protocols which largely develop loss history is the type of applicant carriers prefer.
As soon as you have your loss runs and have reviewed your current coverage, you or your broker should set up appointments to complete applications for alternate bids. Allowing your alternative coverage providers 4-6 weeks to prepare their bid is a solid common sense guideline. If you have been adding up weeks during this essay, you are probably asking why I wanted the process started today when you should have multiple quotes in hand by late October or early November following my guidelines.
The answer to your question is I want to make sure you have the time to review all your quotes and strongly recommend you examine how different potential carrier’s proposal recommendations if implemented change your other options.
Okay, I am the bad guy and will be scorned by my peers in the industry for giving out more secrets. Insurance coverage should be valued for what it is, “a risk management tool establishing defined benefits against named perils for a premium.”
Common sense dictates you re-examine your alternatives following the bidding process which is all but certain to raise coverage option alternatives. Historically, asking for a revision to a bid due to changes in coverage requirements is not a time intensive process.
If your bids are reviewed in early November with requests for a revised quote due to changes in coverage options, you should have that information back to you within no more than two weeks allowing your respective municipality time to finalize its decision without any need for a Christmas week special session.
In closing, if you have not reviewed your property and liability option and claims history in the past three years you may be missing a common sense alternative to lower your expenses. Your neighbors, your state associations and your solicitor are all excellent resources to examine in assessing if you should consider taking your coverage to bid. Today’s coverage options present alternative which you might find attractive in providing you the levels of coverage at a short and long term cost which benefits your local municipality. Lastly, planning a four month process for taking your coverage to bid should allow you to find the most appropriate comprehensive coverage which is economically viable.
Next week we begin examining the - Nightmare on Main Street – Workers’ Compensation coverage.
Richard A. Mathews
www.resurrectingcommonsense.com
