The biggest concerns among retailers in the current economy areWorkers' Comp, getting added value from their insurance agency andloss control, says Paul Sabatino, vice president of The HortonGroup in Orland Park, Ill.

Retailers of every size are concerned with rising claimsfrequency; firming Workers' Comp prices; and managing theirrisk. 

Fortunately, the Horton Group—a mid-sized brokerage handlinginsurance, risk management and employee benefits for a variety ofretail businesses nationwide—takes on every type and size of retailclient, from large construction firms and manufacturers tomom-and-pop flower shops along Main Street.

The broker is licensed in 50 states, withbranch offices in Chicago; Elkhart, Shererville, and South Bend,Ind.; Waukesha and Wausau, Wis.; and Nashville. 

To keep clients coming back and to lure in new prospects, Hortonfollows a simple rule that also differentiates it from the pack:talking to its clients.

Client needs have evolved since the onset of the GreatRecession, Sabatino says: “The sad part is, a lot of them are justtrying to survive.” Many are cutting back on programs likescheduled monthly safety reviews with their insurance agency inorder to save money. 

Today's retail client is also looking for more risk managementconsultation from their insurance agency—especially if they havebeen cutting back on their human resources or safety departments,Sabatino says. 

Counseling services from Horton have become welcome even withthe mom-and-pop stores, which normally just want the best priceavailable. Horton agencies now see even the smallest retailerslooking for information beyond the basic insurance policy, asking:“Yes we know about insurance, we know we need it; now what can youragency bring to the table besides just the insurance policy?”

It comes down to adding value to the relationship, Sabatinosays: “I think you're seeing that more and more now.” There's onlyso much that differentiates one agency or carrier from another.Clients today are asking, “You tell me: what can you do that agency'B' can't do?”

Agency Specific 

Horton is unique in that its multiple agencies are set up towrite specific types of accounts. Some might only write accountsthat generate lower revenue, but each agency specializes in onefacet of retail. Sabatino writes only commercial policies; anotherproducer does nothing but health insurance; and another, personallines. 

The system works for Horton, where internal sales are the mainfactor driving retail growth, Sabatino explains. “We're justworking a little harder to try to drum up business and go after thetype of accounts that appreciate in value, using the consultation,the added value,” he says. 

The Horton Group is privately held, and so looks for clients whohave the same sensibility. “We're not an alphabet house, an Aon ora Marsh; we consider ourselves right underneath them,” Sabatinosays. “We're looking for accounts that we feel are growing and wantto partner with an agency that as they grow, they haven't outgrownus. We can grow right with them and help them every step of theway.

“But we're also unique in that we haven't forgotten where wecame from,” he adds. “We still write and want any size of business.[CEO] Glenn Horton hasn't forgotten where he camefrom.” 

Even though smaller retailers won't need network-safety or othertypes of counseling Horton does with large, growing clients,smaller ones receive the same degree of attention, hesays. 

Pricing

The retail-insurance segment was a buyer'smarket for the past few years up through 2012, but is waning now asprices tighten and carriers take another look at underwriting.“It's starting to tighten up pricewise. And carriers, because theywere losing money, were starting to re-underwrite,” Sabatinosays.

Workers' Comp carriers in particular have been looking to makebig changes: Where many were offering rate cuts of 35% to 40%, nowit's only about 10% to 15%, he says. In Workers' Comp, the rate per$100 is set by the National Counsel of Compensation in each state.In recent years, Workers' Comp carriers were offering retailclients with a good Workers' Comp Mod discounts of 35% on top ofthe 10% they'd already been giving; some clients were paying just55% of the dollar rate for workers comp for theiremployees. 

“That was happening everywhere. Workers' Comp claims were justgetting crucified; you were basically losing money on the firstclaim,” Sabatino says, so Workers' Comp carriers backed off togiving just 10% credit. For some retail clients, that meant anupswing in premium by as much as 25%. Carriers have already lost somuch money on this line of business that a premium hike is the onlyway to mitigate some of their losses.

Risk Management

Mitigating claims in retail requires a great degree of riskmanagement in the area of Workers' Comp, Sabatino says. That's whybusiness owners are more often choosing restricted duty for injuredemployees rather than time off work with benefits. 

“It's amazing how quickly somebody can get back to work forfull-time duty when they have to sit and answer a phone for eighthours a day instead of their regular work,” Sabatino says.

Workers' Comp claims are tough for retail owners when they don'twant to pay full salary for a worker who is working a partial ordecreased schedule. “It can be tough for some owners to swallow.That's where you really have to sit down and say, 'I get it: butit's pay now, or pay later,'” Sabatino says. 

Horton's loss-control group is also very bigon promoting wellness to drive down health costs, which Sabatinodescribed as “getting out of hand” at many companies that don'tfocus on it. Horton clients are starting to require their personnelto submit to wellness checkups through annual physicals to preventmajor illnesses and ward off major health careclaims. 

“It's for your own good,” Sabatino says of the messagecommunicated to its clients' employees. “Get your blood pressurechecked every year. Get an annual physical. If you don't do it,[Workers' Comp carriers] surcharge.” Retailers are starting to getit too, Sabatino says: They see wellness not as a necessary evil,but rather as a tool to control the price of their premiums.

CYBER INTEREST GROWS

One of the retail coverages growing in interest—if notnecessarily uptake—is Cyber Liability, Sabatino says. “With all theinformation that a company holds, that has become a hot button,” hesays. Even the smallest retailers fear being hacked and losingvaluable business and customer information. “The problem there is,they know [the risk], but do they want to pay for it?”

Cyber Liability is where Employment Practices Liability wasmaybe five or six years ago, Sabatino says. People understand it,but nobody wants to pay for it because “it won't happen to me.”

“Now I'm not saying it's commonplace, but people get it,”Sabatino says. His Cyber Liability pitch to clients is, “You'rereally buying an attorney on retainer because no matter what youdo, you have to defend yourself.”