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 did you get into the insurance industry?
I have a degree in Anthropology. There are no jobs in Anthropology, so while finishing school, I asked my father, a career Insurance Risk Manager, who I should send resumes to…? Here I am.
What trends are you seeing in the insurance industry or markets?
I began my career as a property underwriter before moving to the brokerage side. My education as an underwriter included a blending of the “art” and “science” of underwriting. Over the course of the last three decades, with the advances in technology and our ability to capture and analyze data, there has been a trend away from the “art” side and more reliance on the “science” side of underwriting. Models and statistical compliance dictate the majority of insurance company underwriting positions, as well as the response from individual underwriters on any given risk. The “art,” or gut feel, isn’t completely gone, but is definitely a lesser part of the equation.
What advice are you giving to clients looking to purchase or repurchase insurance?
Know yourselves and the insurance environment you are operating in. No one knows your risk and exposures better than you do. Learn to “speak underwriter,” know what is most important to them, and then express yourself in those terms. Show underwriters why, of all the risks they see, you are one they want to write. If the market is changing, know why, and represent how you are on the better end of what is causing the change.
What question do you wish your clients would ask you?
How can we stabilize our insurance programs over the long term?
There are factors that can influence a program’s stability. The first is relationship; building a solid, trusted relationship with a carrier is crucial. That means communicating the good and the bad. It means taking the time to visit them and see them not only when you need something, but more importantly, when you don’t need anything. Relationships help smooth out rough edges and get things to lean your way, when the data might say otherwise. The second factor is committing capital when you have it. If you just saved material dollars with a favorable renewal, invest those savings back into risk improvement. It will pay dividends when the market isn’t so favorable. It also tells underwriters a great story.
How are insurance products in today’s markets changing?
Insurance products are becoming more expansive. Across multiple lines, what insurers are offering goes beyond the simple issuance of an insurance policy. Additional risk management services such as loss control, loss prevention, risk evaluations, notification services, risk mapping, and crisis management are often included in what an insurer provides as part of the premium.
What is the key issue you are facing as it relates to insurance products / policies today?
As the world becomes more and more reliant upon a digital infrastructure, the lines between what one policy covers versus what another covers are becoming increasingly blurred. Risks are evolving more rapidly than the insurance industry’s ability to keep up with the emerging exposures. Cyber risk is ubiquitous now and insurers attempt to provide coverage solutions that can overlap from one policy to another – Property, Cyber, Liability, Crime & Fidelity, E&O. The lack of a clearly defined product can add complexity to any loss.
What risks should clients be using insurance products to mitigate that they may not know they can use insurance for?
Supply chains are making many companies “global” even if they don’t think of themselves that way. From the call center they may rely upon that sits in India to the component parts that are manufactured in China, even today’s small business’ can have exposures to their livelihood that reach far beyond US shores. Understanding the risks that face suppliers of a company’s raw materials, product components and customer services is vital. There are insurance products to protect companies against many of those risks that buyers may not be fully aware of.