Categories
Press Release

RMC Group Expands Its Property and Casualty Division

RMC Group is pleased to announce that two team members have passed their Resident Customer Representative Insurance Exam. Kathleen Gill and Kelly Wild passed their state exam and are now licensed Florida 4-40 Customer Representatives.

The 4-40 Customer Representative License allows an individual to transact insurance in an office as a salaried employee of a General Lines Agent or Agency. Before taking the 4-40 exam, they had each received their Professional Customer Service Representative (PCSR) designation.

“We’re proud of their hard work and determination to further their careers,” commented Ashley Simpson, RMC’s Human Resources Manager. “And excited for them to continue to grow in their roles here at RMC.”

With two new customer service representatives in its Bonita Springs headquarters, along with new hires, Michael Rindenau and Joy Savasta-Lagan, RMC Group continues to expand its Property and Casualty division.

Categories
Press Release

Michael Rindenau Joins RMC as Director of Marketing

RMC Group is pleased to announce that Michael Rindenau has joined the company as Director of Marketing, Property and Casualty Division.  He will also contribute to RMC’s Captive and Health operations. As Director of Marketing, Michael will be responsible for the overall management of RMC’s Property & Casualty division, including developing underwriting relationships with carriers. His goal is to deliver the best possible insurance portfolio to clients based on standard and alternative market options.

Michael Rindenau
Michael Rindenau

“Having spent many years preparing for this role, I am ready to take the Property & Casualty Division at RMC Group to new heights! Looking forward to an exciting 2021,” Michael said.

Michael brings over 30 years of experience in the Property and Casualty insurance industry to RMC Group. His in-depth knowledge of Property and Casualty insurance products and outstanding insurance carrier relationships will make him important member of the RMC Group team.

Previously Michael worked for Insurance Office of America in New Jersey. In that role, Michael led a Property and Casualty team in preparing submissions for new and existing large commercial businesses. He also served as liaison between multiple offices and national insurance carriers, establishing contracts and long-term commitments.

Michael is a licensed insurance agent in the state of New York and New Jersey, and a graduate of Brooklyn College.

Mark Elwell, Executive Vice President of Risk at RMC Group, commented, “Michael recognizes the need for creative solutions during this period of rising costs and limited coverage availability. His experience, knowledge of the market, and relationships with carriers will be invaluable in helping our clients find the right coverage.”

Categories
Business Insurance

‘Tis the Season to Stay Protected

As we go into the final weeks of 2020, cyber protection has become vitally important to every company, organization, or individual that uses any form of technology; whether a computer, laptop, cell phone, or server.

Let’s not give the bad apples easy access to our most important assets personal information and data.

Here are some tips on how to stay protected as we finish out 2020 and move into the new year:

  • Store your file backups off-site
  • Maintain Antivirus and Antimalware software
  • Automate software and application updates
  • Use a firewall whenever possible
  • Disable unnecessary file and media sharing processes
  • Delete old files from the cloud or off-site back-ups
  • Install privacy settings anytime you get new software
  • Use encrypting data software and hardware

We want to wish everyone a wonderful holiday season! So together let’s stay safe, diligent, and make it harder for those with bad intentions to do us harm.

For more information on cyber insurance and how to protect your business, contact RMC Group at 239-298-8210 or [email protected].

Categories
Risk Management

Captive Insurance for the Mortgage Industry

The mortgage industry is flourishing.  Low interest rates and migration out of population centers mean more people are looking for homes, which means more people are looking for mortgage loans. However, with increased business comes increased exposure. While record lending may fuel growth, it also adds risk.

Growing Risks and Exposures

The mortgage industry faces many different types of risks.  Whether a business is a lender or a loan originator, there is exposure. The pandemic has caused shutdowns, forcing many businesses to close; some permanently.  This has resulted in layoffs and job losses. The employment rate, which was recently at an all-time low, is now more than double what it was before the pandemic.

When borrowers lose their jobs there is an increased chance of a loan default. Unemployment, underemployment, and a struggling economy can be tell-tale signs that the housing market is going to suffer, if not now soon. And, as a rule of thumb when the housing market struggles, the mortgage industry suffers as well.

In some cases, a loan originator that sold the loan may be required to buy the loan back or refund commissions.  These losses go directly to the business’ bottom line and are in addition to more traditional risks, such as E&O, legal liability, employee-related claims, and reputational risk that any business may face.

A business may be able to insure against some of these risks.  However, not every risk can be covered commercially, and some insurance coverages may be prohibitively expensive.  Fortunately, there is a solution when the commercial market will not do.  And that is a captive insurance company.

A captive is an insurance company formed by a business to cover the risks and exposures of the business.  It enables a business to buy insurance that is tailored to the specific needs of the business.

Coverage Possibilities

RMC has worked with the mortgage industry for many years. We have helped mortgage companies form and manage very successful captive insurance companies.  Some of the risks that a captive can cover are:

  • Administrative Actions – fines and penalties by governing bodies
  • Collections Risk / Clawbacks – based on EPO’s and EPD’s
  • Directors & Officers – exposures for the officers of the company
  • Deductible Reimbursement – reimburse deducible layers of commercial insurance risk
  • Cyber – broad coverage
  • Loss of Key Contract – losses of revenue because of a lost contract (think Fannie/Freddie Mac)
  • Medical Buydown – layer of employee medical insurance should the company meet the requirements
  • Regulatory Change – operational or revenue losses based on regulatory changes
  • Reputational Risk – covers revenue lost due to a reputational exposure

Mixing Commercial Risk into a Captive

A captive insurance company can cover many types of standard commercial risks.  Some risks can be fully covered by the captive, instead of through the traditional commercial market.  Other risks may be better handled by a combination of a captive and a commercial insurer.

E&O, Fidelity Bonds, Professional Liability, Workers Compensation, General Liability, and Property can all be written by the captive or by a combination of a captive and commercial insurer. In some cases, it may make sense to use a fronting carrier where an admitted company is required. In other cases where an admitted carrier is required, a business can reduce premiums by increasing its deductible, and the captive can write a deductible reimbursement policy.

Taking on the Risk of Your Health Insurance

A mortgage company, like any business, has employees.  And, like any business, health care is a major expense.  Most businesses are unaware that a captive can help them reduce their healthcare costs.  By using its captive to assume some of its healthcare risks, a business can significantly reduce its overall spending while still providing its employees with first-class healthcare.

To discuss your options and to see if a captive insurance company is right for your business, contact RMC today at [email protected] or 239-298-8210.

Categories
Risk Management

How to Go from Salesperson to Advisor with Alternative Risk Strategies

How can you become a trusted advisor to your clients providing them more value than you currently are? The answer is offering them alternative risk management strategies.

Won’t offering alternative strategies reduce my commissions? Maybe, but you could go from being a commodity salesperson who could be replaced by anyone with a lower renewal offer to a consultant who receives both commissions and consulting fees.

Hear me out…

Say you write both the Property and Casualty Insurance as well as the Employee Benefits for a manufacturer with 200 employees and $45 million in annual revenue.

Sounds like a solid account!

But in 2020, you had to explain that there’s no payout for the $3 million in business income they lost when their plant was shut down due to Covid-19 because they didn’t have direct damage to the plant.

And then in 2021, their overall renewal is going to cost 25% more due to rate increases.

Suddenly, being the agent on their insurance account doesn’t make you feel quite as secure. Particularly when you find out that their investment advisor has been talking to them about captive insurance companies for a while.

What if you had been the one to bring the captive insurance company option to them?

When the denied claim happened, what if you had taken the opportunity to explain that a captive insurance company could write contingent business income? And would pay out if there wasn’t direct physical damage.

A captive insurance company can even cover extra expenses for a manufacturing business like replacement suppliers. So, when their manufacturer in China couldn’t get parts out due to the pandemic, they would have had coverage.

As the advisor, you should always give options to your client. It will show the client that you are more than just an average advisor. It will prove to them that you are a vital team member and that you have their best interest at heart.

Before your next call, what if you came to your client with a plan to increase deductibles on their commercial insurance policies, then covered those gaps through a captive insurance company? Or with a plan to help them insure a layer of their employee benefits themselves and protect against catastrophe with stop-loss which would allow for no increase at renewal?

Then with these new plans and a newly formed a captive insurance company, you can help them understand the new data available that results from the captive. This will create better loss control and coordinating renewals each year to maximize the benefits of a blended strategy as their risk consultant. Suddenly you’ve become a hero and vital team member instead of just another salesperson.

Become the trusted advisor by partnering with RMC Group to find the best solutions for your client. To schedule a call with a RMC professional, click here.

Categories
Risk Management

Why Your Insurance Keeps Getting More Expensive…

And What You Can Do About It

Why are the policies that you purchased last year to protect your business more expensive this year? Because the insurance market is hardening.

Okay, hardening seems an appropriate word because it is certainly harder for your business to get the insurance that it needs at an affordable cost.  But what does that nice bit of industry jargon actually mean?

It means that insurance companies are becoming more selective about what risks they will take and charging more to insure those risks.

Why is the Market Hardening?

Some reasons why are obvious. Insurance companies have had to pay out significant claims for an above-average number of wildfires, hurricanes, and now Covid-19. (Even though many of these claims were denied, it still costs the insurance company to legally defend their position.)

Other reasons are more subtle. Lower interest rates and a fluctuating stock market have impacted insurance companies’ return on investments and lowered their profitability.  Working from home has increased cyber risks and civil movements have led to claims being filed against companies for their diversity initiatives or lack thereof.

Take on Your Own Risk

However, insurance is still a lucrative industry, as the ubiquitous TV commercials, sports stadium sponsorships and high-rise buildings all attest. Especially if the risk can be well-understood and managed.

So perhaps instead of transferring all your business risk to an insurance company that is not particularly keen to take it, you should retain some of the risk yourself.

If you’re willing to increase the deductibles on your policies or self-insure a layer of your employee medical costs, the premiums an insurance company charges you are likely to go down.

You then have two options: 1) simply hold aside money for these risks or 2) create your own insurance company and formalize your role as an insurer. This is known as a captive insurance company.

Captive Insurance Benefits

Creating a captive insurance company can provide better risk management for the parent company because of increased attention, trackable data, and loss control measures. In addition, your own insurance company could invest the premiums, where normally you would lose those premiums to an insurance company, which invests them and retains the investment gains.

RMC Group can help you establish a captive insurance company.  We will do a complimentary risk review of your business and the insurance policies you currently have. This will help you decide if these options are viable for you. To schedule a call with an insurance professional, click here.

Categories
Risk Management

An Insurance Policy is a Contract

When it comes to insurance, one mistake that many people make is failing to read their policy.  Most insureds believe that they understand what their policy covers simply by the name of the policy.  For example, an auto policy covers everything car-related, and a homeowner’s policy covers everything that can happen to your home.  However, this is a big mistake.

An insurance policy is a contract between the insured and the insurance company, and, like any contract, its effect depends upon the language of the contract.  In addition, since contract interpretation is a matter of state law, the state where your policy is issued is a huge factor.  The same language in one state can have a completely different meaning in a different state.

A Business Interruption Policy Doesn’t Cover All Interruptions of Business

The need to read your policy has never been more clearly illustrated than during the Covid-19 pandemic, which has affected businesses from the hospitality sector to the travel industry to medical practices.  Whether as a result of government orders or the fear of customers to leave their homes, businesses of all types have either had to shut down completely or reduce their capacity.  As a result, businesses have lost significant revenue during this time.  Fortunately, many of these businesses have business interruption insurance policies and have asserted claims under their policies.  Unfortunately, without exception, the insurance companies issuing those policies have denied coverage.  Why?

The quick and cynical answer is that the insurance companies do not want to pay these claims.  The full extent of business loss in the American economy is not yet clear.  However, one estimate is that businesses have been losing close to $40 billion a month.  Yet, the entire property and casualty insurance industry has collected approximately $6 billion in premiums.  Clearly, the premiums will not cover the losses.  However, another reason may be that the insurance companies are simply reading the language of the policies and enforcing the policies as written.

The typical business interruption policy contains language that protects a business against the inability to operate due to loss or damage to property.  In most states, the courts have interpreted this language to require actual physical damage to a business’ building.  Without demonstrated physical damage to property, there is no coverage.

Claims Have Turned to Lawsuits

The result has been that, since the pandemic began, over 5,000 lawsuits have been filed against insurance companies.  While none has been fully adjudicated yet, we are beginning to see some results.  In most cases, an insurance company will respond to a lawsuit by filing a motion to dismiss.  A motion to dismiss challenges the sufficiency of a complaint, and, by a large margin, insurance companies are prevailing on their motions to dismiss.

In order to overcome a motion to dismiss, a business must allege that its business property was damaged in the same way that it would have been damaged by fire or flood.  This is a difficult bar to eclipse.  Most business closures have been caused by government shut-down orders, rather than actual physical damage to busines property, which prevents its use.  Some plaintiffs have tried to get around this problem by claiming that their property has been damaged by the presence of the Covid-19 virus on the premises.  This has worked but only in a small number of cases.

The reason that this claim has not been more successful is that many business interruption insurance policies contain a virus exclusion.  This virus exclusion was generally added to business interruption policies in 2006.  However, there are some business interruption insurance policies that do not contain a virus exclusion.  In those cases, the plaintiffs have been able to defeat the insurance company’s motion to dismiss.

Governmental Action

Another way in which businesses are trying to get around the “physical loss or damage” requirement is by claiming that their business interruption was caused by governmental action.  Therefore, whether their physical location was damaged is irrelevant.  The government order caused the loss of their ability to use their premises.

Again, this approach has been only marginally successful.  In a very small number of states, the courts have said that the policy’s use of the phrase “loss or damage to property” must be read to mean that “loss” and “damage” are not synonymous.  Otherwise, if they meant the same, one would be what courts call “surplusage”.  In other words, either loss or damage would be excess language without adding any real meaning to the phrase.  Courts tend to avoid surplusage.  However, this argument has worked in only a few states.  In most states, the courts have said that the typical business interruption insurance policy does not cover governmental orders, as would a regulatory change policy.

What’s an Insured To Do?

The obvious answer is – READ YOUR POLICY!  However, this is not a very satisfactory answer for a couple of reasons.  The first is that insurance policies are not pictures of clarity.  They are often ambiguous and contain confusing endorsements and exclusions.  Even a highly educated businessperson may have difficulty understanding a policy if he or she is not experienced at reading policies.  The second is that, by the time you’ve read your policy, it is often too late.

The best answer is that you should work with an experienced and knowledgeable insurance professional, like RMC, before you buy your policy.  After all, you wouldn’t sign a contract without first consulting an attorney, and an insurance policy is a contract.  Not only can your insurance advisor explain your policy’s provisions before you have a claim, a professional advisor will have access to the policies of multiple companies and can find the policy that best suits your needs.  In addition, an insurance professional can negotiate with an insurance company to obtain coverage that is not part of the standard form policy.

A second reason to work with a professional is that the professional can introduce you to innovative concepts, like a captive insurance company that may better suit your needs.  A captive insurance company is an insurance company formed by a business to insure the risks of the business.  It can work in concert with your commercial insurance, replace some or all of your commercial insurance or insure risks that are not insurable or are prohibitively expensive on the commercial market.  Because you own your captive insurance company, you control the risks that it can assume.  As a result, you can tailor its policies to cover your specific needs.  While it is too late to form a captive to insure against the Coved-19 pandemic, now is the time to plan for the next unexpected risk.

Categories
Business Insurance Personal Insurance

What You Need to Know About Coronavirus and Your Homeowners Insurance

Your homeowners insurance safeguards you against financial loss in the event your home and belongings are damaged. It also covers you if you’re found liable for an accident on your property. So, what does this have to do with the COVID-19 pandemic?

COVID-19 has affected nearly every aspect of daily life. It’s impacting businesses across multiple industries and changing the landscape for many types of insurance.

But what about homeowners insurance?

The virus itself doesn’t have much of an impact on homeowners insurance.  But, the fallout may. People are spending more time at home working and schooling their kids. It’s a good time to double check and make any necessary changes to your insurance coverage.

Also, if you find yourself needing to make a claim, the claims process may have changed.  Your insurance company may not be sending claims adjusters into the field. Insurers are moving toward an online claims process during the pandemic. That means you will be recording damage via photo and/or video and submitting evidence to the company online.

Read on to learn more about:

  1. How COVID-19 and related lifestyle changes might affect your needs for homeowners insurance coverage
  2. How COVID-19 could impact your insurance claims
  3. How insurers are responding and adapting to the pandemic

Your Homeowners Insurance Coverage Needs

Coronavirus doesn’t impact personal property, so it’s unlikely that you will need to make any changes to your property coverage. However, the virus does impact the amount of time that people spend at home, and more time at home means more potential for accidents. You may find that you need more, or different, liability coverage.

Many people are at home working remotely for the first time. This arrangement often translates to more business assets under your personal roof. If you fall into this category, a home business endorsement might be necessary to cover your work assets, like computers and other equipment.

If you rent out a property or a room on home sharing apps like Airbnb, it’s very likely that travel restrictions and social distancing are keeping people from using your vacation rental. You should be able to temporarily halt your coverage until you need it again.

Let’s explore each of these in more depth.

Liability Coverage

If anyone in your household, including pets, causes damage to someone else’s property, then your personal liability coverage will protect you.

Now that your neighbors and kids are home from work and school, more people are out walking around.  It’s even more important that you take measures to protect yourself.

Look around your property and consider what might attract a child who’s out wandering the neighborhood. Do you have a pool? A backyard swing set that’s not fully fenced? A dog that sits outside on a leash or in a run? Any of those could result in an accident that exposes you to liability.

Adults could get hurt on your property as well.

A dog out for a walk might decide to follow a scent, causing someone to trip and fall. You never know what will happen.  So, it’s a good idea to have at least $300,000 of personal liability coverage on your home insurance policy.

If you do have a pet, find out whether you’re covered for animal related damages. Some policies exclude certain breeds.

Home Business Equipment Coverage

If COVID-19 has you working from home, find out how much of your business property is covered under your homeowners policy. Most policies only cover $2,500 for business equipment, and you may have more in your makeshift home office.

Fortunately, many insurers offer business equipment endorsements to protect your work equipment. These endorsements give you up to $5,000, and in some cases up to $10,000 of coverage. Call your agent to find out your options for increasing your business equipment limit.

Short-Term Rental Coverage

Do you have a room or second property that you rent out through Airbnb, VRBO, or a similar company? Unless you rent regularly enough to need business coverage, your coverage probably takes the form of an endorsement or rider on your regular policy.

There’s a good chance that you’re not using that coverage right now and won’t need it for a while. Ask your insurer if you can pause the coverage until you need it again.

How COVID-19 Impacts Homeowners Insurance Claims

Even before the coronavirus pandemic, online and automated claims processing started to become a trend. Now, social distancing means that it’s no longer an option for most people to have an adjuster come to their homes, so virtual claims are the new norm.

Much of the claims process is the same. The primary difference is that, after you file a claim, you won’t wait for someone to come inspect the damage. Instead, you write up a report in your own words, make a list of what was damaged or stolen, and take photos or videos as evidence of the damage. Then you’ll submit your report and evidence virtually and await your reimbursement.

Insurers might still insist on sending adjusters for larger claims, but you can expect that to happen less frequently.

How Are Home Insurance Companies Responding?

Online claims adjustment isn’t the only process that insurers are changing during the crisis. Some are offering financial aid and forgiveness to customers who are experiencing financial difficulties due to closures and cancellations.

In California, Insurance Commissioner Ricardo Lara has called for companies to offer a minimum 60-day grace period for payments. Pennsylvania, Wisconsin, and several other states are also asking insurers to waive late charges and extend grace periods. David Sampson of the American Property Casualty Insurance Association (APCIA) has asked all insurers nationwide to be similarly flexible and to relax deadlines around claims filing.

Many companies in the homeowners insurance space are extending inspection deadlines in cases where homes require repairs for policies to remain in place. Insurance company representatives may be working from home, but policyholders shouldn’t expect disruptions in service.

These are industry-wide guidelines and patterns, but every insurer will be making its own decisions. If anything about your coverage is in question, give us a call. We are standing by and fully operational to provide you with customer support.

Categories
Risk Management

Group Captive Case Study

How a group of like-minded business owners in the same industry saved money on business insurance with a group captive.

A group captive is a property and casualty insurance company owned by the members of a group.  It is often formed for a limited purpose and puts an emphasis on risk control and loss mitigation practices.

Background

A hardening insurance market and increased competition drove members of a state concrete products association to look at alternative options for their rising property and casualty insurance costs; specifically General Liability, Workers Compensation, and Commercial Auto. 

Some members of the association banded together and formed a group captive insurance company to drive down costs, help control losses and provide greater control over claims experience.

Before forming the captive, the 31 members had obtained insurance on the commercial market, and each paid at least $253k in annual insurance premiums.  Collectively, they paid premiums just under $8M. The average rates for the group are listed below:

 

Solution

The members formed a group captive.  As part of the process, a selection committee was appointed to vet potential members of the group.  This ensured that only businesses that were committed to the i standards of the group were involved. 

The members of the group shared information and implemented safety procedures with the goal of minimizing losses and reducing premiums for the entire group.

Results

The results so far have been positive, in the second year of operation, there was a premium increase in the group program. This increase paid by members was half of the increase seen by similar companies for the same coverage in the open marketplace. 

As the captive matures, the expectation is that premiums will continue to be less than comparable insurance purchased in the commercial market.

The members of the group maintain best practices and safety protocols that reduce loss frequency and loss ratios. This results in lower premiums for the members and greater profits for the captive. 

Categories
Risk Management

Captive Insurance Covid-19 Claims

We have received a number of calls asking whether the economic disruption caused by the Covid-19 pandemic can be covered by a captive insurance company and how a captive should respond to the crisis.

What is a coverage trigger?

Insurance is the transfer of risk from a person or company, called the insured, to an insurance company in exchange for the payment of a premium.

The risks covered and the conditions of coverage are documented in a written insurance policy.

The policy details the incidents, events, or circumstances that trigger coverage under the policy. The triggers of coverage under a policy depend on the type of policy and the language of the policy. The type of policy and the language of the policy are based on the underwriting/actuarial report obtained by the insured company.

What happens after coverage is triggered?

It is important to differentiate between triggers of coverage and conditions of coverage.

Conditions of coverage are the steps that an insured must take after a trigger of coverage occurs before the insurance company will accept liability under the policy.

Conditions of coverage include notifying the insurance company that a claim has occurred, with a detailed description of the claim, and submitting proof of loss.

What types of policies might cover COVID-19?

Some of the policies that may provide coverage for losses triggered by the Covid-19 pandemic are:

  • Business Interruption
  • Contingent Business Interruption
  • Supply Chain Interruption
  • Communicable Disease Liability
  • Regulatory Change
  • Political Risks

How do you determine if COVID-19 is covered?

Whether or not a policy provides coverage depends upon the language of the policy.

Each policy has a unique definition of Insured Occurrence and Insured Loss.  The definition of Insured Occurrence determines whether a certain event, such as the Covid-19 pandemic, is covered under the policy.  The definition of Insured Loss determines the types of economic loss covered under the policy.

The first question to ask is whether the economic disruption caused by the Covid-19 pandemic falls within the definition of Insured Occurrence contained in the policy.

If it does, the next question is whether the losses suffered by the insured fall within the definition of Insured Loss.  Only if the answer to both questions is yes will the policy provide coverage.

What are the steps if you think you have a claim?

If you desire to make a claim under a policy as a result of the Covid-19 pandemic, it is important for you to document any potential claim.

You need to identify the nature of the disruption to your business and when and why it occurred.  In addition, you need to document your losses.

We understand that losses may be incurred over a period of time.  However, it is important that you provide notice of a claim to your captive as soon as you are aware of the claim, even if you do not know the exact amount of loss.

Every claim submitted will be investigated and adjusted.  This process can be made much easier by gathering information, both loss specific and financial when an event occurs and providing it in a timely manner.