The biggest concerns among retailers in the current economy are Workers' Comp, getting added value from their insurance agency and loss control, says Paul Sabatino, vice president of The Horton Group in Orland Park, Ill.

Retailers of every size are concerned with rising claims frequency; firming Workers' Comp prices; and managing their risk.

Fortunately, the Horton Group—a mid-sized brokerage handling insurance, risk management and employee benefits for a variety of retail businesses nationwide—takes on every type and size of retail client, from large construction firms and manufacturers to mom-and-pop flower shops along Main Street.

The broker is licensed in 50 states, with branch 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, Horton follows a simple rule that also differentiates it from the pack: talking to its clients.

Client needs have evolved since the onset of the Great Recession, Sabatino says: “The sad part is, a lot of them are just trying to survive.” Many are cutting back on programs like scheduled monthly safety reviews with their insurance agency in order to save money.

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

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

It comes down to adding value to the relationship, Sabatino says: “I think you're seeing that more and more now.” There's only so 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 to write specific types of accounts. Some might only write accounts that generate lower revenue, but each agency specializes in one facet of retail. Sabatino writes only commercial policies; another producer does nothing but health insurance; and another, personal lines.

The system works for Horton, where internal sales are the main factor driving retail growth, Sabatino explains. “We're just working a little harder to try to drum up business and go after the type 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 who have the same sensibility. “We're not an alphabet house, an Aon or a Marsh; we consider ourselves right underneath them,” Sabatino says. “We're looking for accounts that we feel are growing and want to partner with an agency that as they grow, they haven't outgrown us. We can grow right with them and help them every step of the way.

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

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

Pricing

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

Workers' Comp carriers in particular have been looking to make big changes: Where many were offering rate cuts of 35% to 40%, now it'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 retail clients with a good Workers' Comp Mod discounts of 35% on top of the 10% they'd already been giving; some clients were paying just 55% of the dollar rate for workers comp for their employees.

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

Risk Management

Mitigating claims in retail requires a great degree of risk management in the area of Workers' Comp, Sabatino says. That's why business owners are more often choosing restricted duty for injured employees rather than time off work with benefits.

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

Workers' Comp claims are tough for retail owners when they don't want to pay full salary for a worker who is working a partial or decreased schedule. “It can be tough for some owners to swallow. That's where you really have to sit down and say, 'I get it: but it's pay now, or pay later,'” Sabatino says.

Horton's loss-control group is also very big on promoting wellness to drive down health costs, which Sabatino described as “getting out of hand” at many companies that don't focus on it. Horton clients are starting to require their personnel to submit to wellness checkups through annual physicals to prevent major illnesses and ward off major health care claims.

“It's for your own good,” Sabatino says of the message communicated to its clients' employees. “Get your blood pressure checked every year. Get an annual physical. If you don't do it, [Workers' Comp carriers] surcharge.” Retailers are starting to get it 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 not necessarily uptake—is Cyber Liability, Sabatino says. “With all the information that a company holds, that has become a hot button,” he says. Even the smallest retailers fear being hacked and losing valuable 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 was maybe 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're really buying an attorney on retainer because no matter what you do, you have to defend yourself.”

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