Public RMs Pose Unique Risk Challenges
When shopping for an insurance broker, public risk managers are looking for someone who can offer fair prices and access to good products, but they also need services that are tailored to their unique exposures.
The primary demand brokers need to fill is access to good markets. "Without that they cant help us out, especially now with the government market dwindling due to mergers and acquisitions," said Peter Soriero, risk manager for Jersey City, N.J., and president of the N.J. Public Risk Management Association.
"Brokers need to know their business," he said. "They need to have government experience because it is a different exposure than a private entity [where the services could] apply to any buyer."
Mr. Soriero added that "its always nice to have a dedicated person on the account. Automation is important; if they can provide our renewals and certificates of insurance by e-mail, thats all helpful."
As for the size of the brokerage, he said, "sometimes smaller is better, depending upon the markets they have available. Sometimes if they are too big you can get lost in the shuffle."
He had some renewals come up Jan. 1 that "went very well," with under a 5 percent hike for the citys property program.
Mr. Soriero said his property programs are covered in the traditional market, as is their excess liability policy. "Weve had our excess program for five years and we had one claim that pierced our [self-insured retention]," he noted. "We have very little interaction with our carriers. We havent had a property claim in over 10 years."
A very important service, he said, is how brokers deal with renewals and how they handle multiple proposals for a particular policy. "There are some places where the broker will automatically assume you want to renew the policy and wait until the last minute for a renewal quote," he said. "By then its too late to go out to the market." At the same time, however, "I dont want to go out and look every year," he added.
Whether he does look for a new program depends on the program itself and changes to the exposures, he said. An example was privatization of the water department when a water treatment policy was rolled into the excess program.
What is Mr. Sorieros overall advice to public risk managers? "If youre working with a carrier and a broker, and everything is status quo, and the premiums are steady, and youre getting good service–might as well leave it alone."
John Miall Jr., director of risk management for the City of Ashville, N.C., and former board member, vice president and president of the North Carolina chapter of the Public Risk Management Association, advised brokers to "do your homework" before contacting the risk manager of a public entity. "If the whole purpose of the call is to come and learn about me, theyve wasted their time and mine," he said.
He recommended that what brokers should know includes such items as whether the entity buys insurance from the traditional market, if it is self-funded, and its risk tolerance. "All this is public record and any organization would be glad to share what they do and how they do it," he added.
Brokers should also know that "cities and counties are fundamentally different types of beings. Their organizational structures are different, their exposures are different, and their chains of command are frequently different."
Mr. Miall said he especially appreciates honesty. "Ive had agents and brokers that at times have said, I could get that or we could sell that, but I dont think its in your best interest and here is why," he recalled. "This shows me that they are less interested in selling me something and more interested in maintaining a long-term relationship."
He also likes a broker to stay in touch. "Im not fond of people who show up when its renewal time," he observed.
Stephen Finley, director of risk management for the Denver Public Schools, a separate entity from the city and county of Denver, said he looks for an ongoing relationship. "When I look to a broker, Im looking for a partnersomeone that I can call and ask a question of, and know that Im not on a clock," he said.
Mr. Finley said that he is happy with his brokerage firm, Marsh, located in Denver. His broker, he noted, has a personal history with the public sector and is the broker for several other large entities in the state, "so she is tuned in very closely to issues of the public sector."
Coverages with Marsh, he said, include excess workers compensation, boiler and machinery, and two aviation policies to cover an aviation mechanics program at an adult education center. "Any aviation is expressly excluded in our general liability, so I have to have aviation liability as well as hull coverage," he said.
With Marsh, he added, there are "various bonds" for the self-insured workers comp program as well as several small programsincluding an accidental death and dismemberment program required by federal law for the pre-school Head Start program.
His broker also advises on insurance for specific events at the schools that need extra coverage, such as hot air balloons. "Schools like to bring them in because the kids are wowed by them," he said. "Yet its an aviation coverage which is excluded in our general pool policy. So if were going to do it we have to try to find coverage, and its hard to find."
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, February 27, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.
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