Farella’s Insurance Recovery Group lawyers regularly collaborate with and learn from different players and functions within the insurance industry. To provide more value to our readers, we have reached out to a series of insurance brokers to create the Insurance Broker Series Q&A.
How long have you been in the insurance industry?
How did you get into the insurance industry?
Just before accepting a GC position, an insurance subsidiary of Berkshire Hathaway populated with like-minded lawyers enthralled me to D&O insurance. Understand that “enthrall” and “insurance” are typically not mentioned in the same thought. The industry and its participants from clients, insurers and in-house and outside counsel, continue to be intriguing as we work together to solve problems.
What trends are you seeing in the insurance industry or markets?
Consolidation in order to achieve synergies, including investment in better data and analytics amongst insurers, and better negotiating power amongst brokers. Impact to clients is a better correlation of risk and pricing for mature product lines. For less mature product lines, a broker’s services for their client will remain pivotal in differentiating risk and securing better coverage from insurers.
Insuretech, which brings technology to leverage and perhaps disrupt. Impact to clients is the road to fulfilling customer demands for utility and simplicity, while helping the insurer.
What advice are you giving to clients looking to purchase or repurchase insurance?
Inquire not only about the claim-paying ability, but also the actual claim-paying experience of that insurer. For any client, a claim is inherently a problem. Insurance is generally designed to help solve those problems, and should not add problems.
What 2 – 3 questions do you wish your clients would ask you?
How does insurance fit into my risk transfer strategy?
Sounding a bit repetitive from my response above, but for emphasis…. What are the claims paying ability and claims experience of the various insurers who want to be my insurer?
What key terms/conditions should I care about, and am I getting them?
How are insurance products in today’s markets changing?
Improved innovation and faster rate of adoption for new coverage products to keep up as the world changes (e.g., self-driving cars, cannabis legalization, pet insurance. An example from my day-to-day world, would-be-plaintiffs of securities suits exploring their potential ROI through demands of corporate books and records. The D&O policy can now be expanded to address this).
What is the key issue you are facing as it relates to insurance products / policies today?
With the consolidation of insurers, as well as Wall Street pressure on insurers, we are seeing some changes in risk appetite, and turnover in insurer personnel including claims examiners which can affect the claims handling and recoverable amount. ABD updates our clients, and the impact to them. Others should inquire with their advisors as well.
What risks should clients be using insurance products to mitigate that they may not know they can use insurance for?
Cyber liability which includes both first party claims and third party claims. Most companies have exposure to both kinds of claims now. Unknown to many clients for a long while, cyber risk is starting to move from the server room to the board room. Still, a reputable 2017 poll indicated that only 38% of IT respondents believed their board was equipped to understand their company’s cyber risk. A knowledgeable broker can help educate cyber risk at the C-level.
Clients can also work with their broker to understand their unique exposures, and understand those exposures in the context of an overall risk transfer strategy. This work distinguishes brokers who are experts and advisors, beyond the transactional role.