Archive for the ‘Miscellaneous Updates’ Category

Student Apartments – calling all investors, underwriters and brokers – BEWARE!

September 20, 2011

Why is it so easy to lie (well, I am frank – let’s call it “stretch the truth”) when someone asks a question?  I made a phone call that resulted in exactly what I anticipated and an outright “LIE”!  ‘Who do you have that will insure “Student Apartments”?’  This, after I explained that it was a 4-floor building of 7 units and 5 students in each apartment which I know is a “STUDENT ROOMING HOUSE” description – NOT a description for an Apartment Building.

The office I phoned was a smaller brokerage I know that advertises they insure these exact type buildings (I’ve run into them in my travels) and did exactly what they were expected to do – ask me for my information where I was very evasive since I am a competitor of theirs, unknown to them as John Smith.

Because they have a website and a Facebook page, it becomes easier to document what I need to use in a blog of this sort.  There are “X” insurance “markets” showing in total for their firm – this includes Auto, Substandard Auto, Surety, etc.  This means I can eliminate several and a few more who have expressed to us  (Aviva, for example, does not have the property capacity to exceed $1Million, Intact has withdrawn quotes and Economical refuse to insure) that they do not have an interest in insuring “student housing/apartments” of any sort in our geographic territory (I won’t say they do not in other parts of our country or the world because I know they do have smaller percentages of property on subscription policies available through specialty wholesale markets) – Ontario, CANADA.

I will say the broker stretched the truth, unless they were counting wholesale markets when replying to me.  Why tell me one has 4 or 5 insurance companies that will insure this kind of risk?  Either it is a lie to the caller or to the insurance company when describing the type of business when quoting is requested – OK, I will tell you their firm is also a member of an apartment managers association, and, if they were a larger brokerage, may then have exactly what they told me BUT they are NOT.

I will not accuse the brokerage of misrepresenting to the insurance company – I have only seen 1 policy they had in force where I know this may have happened but if you’re a member of an association, would it not be easier for an insurance brokerage to include this sort of property in their portfolio?

What I do know is that there are several insurance brokerages in my territory of operation who have been misrepresenting STUDENT APARTMENTS to the insurance companies as APARTMENT BUILDINGS – and, for those who are not familiar with the differences, they are huge!  An apartment will house a single family or a couple of unrelated individuals – NOT 5 students who are unrelated in EACH apartment unit.  The risk is greater and very significant to an insurance company so why would any insurance company insure for the same premiums as an apartment and 1/3 or 1/4 what Lloyd’s might charge for Student Rooming Houses?  They would not, knowingly!

I have been researching this a great deal – in both Canada and the USA – and will tell you that there is a good likelihood, in the event of a significant claim, you will find you do NOT have any insurance so why pay for a policy that is not going to respond when you need it to?  If you are paying an insurance premium for “fool’s gold”, do you really believe you can collect for “gold” after the loss?  I am not trying to scare business to my door but being very practical and hope that each of my readers understands that.

It would be easy to document for any company underwriter where the streets are (there are at least a half dozen university campuses – Guelph, Laurier, Waterloo, Western, McMaster, Conestoga – within 1-1.5 hour drive of my home office).  Since I am so familiar with the territory, why not ask?  Even Google Maps will assist if you’re not anxious to contact me.  For those underwriters who are not familiar with this simple fact – Economical and Aviva are presently on risk for many of these buildings that they will not and do not insure – HMMMMM!  How many other insurance companies are insuring “multi-family apartments” within 1-2 kms. of an university campus?  Look at Google Maps and check your building addresses and descriptions!

Knowing that the market in the USA is anticipated to grow (and Canada is following suit) where starts were expected to tally as much in 2011 as in the prior 3 years, I fully understand why insurance brokers are targeting this sort of risk but how long before your reputation is tarnished by not disclosing to your underwriters what is being insured?  How long will it be before loss ratios mount and you risk losing company contracts?

Yes, it may be an impossible task for me to educate everyone involved in the buying, selling and investing in the latest real estate craze but I surely hope to try.  Insurance companies do not have to pay a claim or defend you if there is any known “material misrepresentation” and it will then be up to you to decide how to pursue your insurance agent/broker.  What is the cost – both financially and in time – to you?

Try cutting to the root of the problem and discuss with a professional who is expert in the field of student housing.  I await your comments, mail, calls.  And I cover from Ottawa to Windsor and do know the niche!

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Insurance – a written contract, credibility and integrity vs. “Material Misrepresentation” and “ab initio” cancellation

September 9, 2011

It is strange to sit here and think about how I should address such a topic as one’s integrity and credibility in the Financial Services field – especially given the global financial meltdown of a couple of years ago and some of the lessons that, as a society, were learned – I thought – at the time.

Unfortunately, I have to be critical of competitors of mine which I don’t really like to do.  The reason is that I have seen something, recently, that brought this to the forefront while I have been contemplating it for the past 1-2 (surely, it can’t be 10-20) years now.

When an individual or business owner wishes to “shop” his/her insurance, how should this be done?  Should research be done into the insurance agent/broker and what degree of checking can they do?  Do you care about the “rating” of the insurance company that is quoting and issuing the insurance policy?  What significance is that to whether a claim – your claim – might be reimbursed?  Can an insurance company not pay a claim?  What is “Material Misrepresentation” and something called cancelling “ab initio”?

I’ve been through some excellent training – yes, even Roger Sitkins may have an excellent approach – but I don’t always agree with what is being implemented (hiring people from outside the insurance industry with various specialties and experience to then sell to those same industries but not really know anything about insurance?).  Might that not give cause for misrepresenting the description of operations (how important can this be?) to an insurance underwriter because of a lack of understanding of the insurance business?

Having seen a number of insurance “contracts” – yes, that is what the policy is and what the broker/agent’s “summary of insurance” (or any other written offer/binder until the insurance policy is issued) is – that do NOT properly address a client’s true “description of operations” is incomprehensible.  For many years, I have known of insurance companies who refuse to quote a submission where a licensed restaurant/facility may occupy a strip shopping plaza or where a portion of a multi-tenanted building is vacant.  And yet, that same insurance company will be insuring many clients in that identical situation!

How can any agent/broker explain to his/her client the reasoning behind this?  I don’t know if it is possible!  As to why one individual will provide a quote from “XYZ Insurance Co.” and that same company has declined similar/identical submissions to another broker?  Well, an important reason can be the information that was provided to an underwriter!  If I describe an apartment building that houses 5 or 6 students in each unit as a High-Rise Apartment Building, will I see the same result as a properly worded submission – “High-Rise Apartment Building occupied as Student Housing”?  Anyone who is familiar with our industry will know that the answer to this question is very obvious!  It is just as apparent to a seasoned veteran as describing a frame building as fire-resistive and we all should know that critical difference.

This week, I was advised by an insurance company that they have a “capacity” of $1,000,000 for property in a specific class of business – meaning buildings, contents, etc. (and $1,000,000 is NOT a large sum of money).  To insure a greater amount will then require obtaining their Head Office approval and the possibility of purchasing “re-insurance” at much higher rates than their normal charge might be – this is not too likely to happen!  They would, in all likelihood, not be competitive, either.  That company, apparently, quoted a competitor of mine (according to a client) for $20,000,000+ in Property values at lower premiums – hmmm?  What does that tell you?  It tells me the insurance company may now rescind that very quote (and I would hate to be the broker having to explain that one to the client – oh, it is easy to say it’s the insurance company’s fault, right?).

And when there is a claim that your (not my) client – I’m now directing this at my competition – expects to be reimbursed by the insurance company, will you be there to explain why – due to “material misrepresentation” – that the insurance company refused to pay?  I surely hope so but tend to doubt it.  Maybe my industry competition will claim that this is a case of my crying over “sour grapes” but I was raised in a family where a handshake meant something and a written contract wasn’t necessary (yes, I know those were the days, as is often said) and credibility and integrity still mean something to me!  Where is your integrity and credibility going to be?

I have known, countless times, of manufacturers who exported most of their product and were not paying suitable liability insurance because the company underwriter has limits for percentages of foreign sales and was never advised that they were exceeded (e.g. 10% when it was 90%!).  One instance, I know quite well, was a Wholesaler/Importer of goods from Southeast Asia where the insurance company was not aware of what the product was or where it was manufactured – and yes, it was “critical”!  Yes, company websites are checked, sometimes, and the info showing can be significant in the event an underwriter is reviewing your quote or renewal.

Having as many years in this industry, as I do, should give some of my clients and prospective clientele a degree of comfort but when another individual can insure someone for not 15-20% less but at 1/3 of my quoted premium, will you be really caring about that?  I surely hope so!  Then again, maybe you will think that insurance is a necessary evil and that nothing will ever happen to you and your business!  GOOD LUCK!

Oh, if you really care to know more about “material misrepresentation”, cancellation “ab initio”, etc., please contact me by your feedback, here or elsewhere, on the many postings I have.  Only then you may find that your provider is not too credible and wish to replace him/her!  But I won’t be waiting with nothing to occupy my time because I do have many clients who want a professional handling their insurance business for them.

Insurance, Risk and Valuation

January 27, 2010

This is something I simply don’t understand – insurance professionals who are reluctant to advise – just because of their Errors & Omissions exposure?  If they’re the professionals, why not use their expertise and training for their clients’ best interests?

Are they afraid that their clients may see them for what some salespeople truly are?  A salesman/saleswoman and not a professional advisor!

Maybe they would prefer their clients approach us first – for Risk Management advice.  This definitely helps avoid that observation, doesn’t it?

Recently, I spoke with an insurance broker who refused to assist a client in the determination of adequate Business Interruption insurance – afraid of a loss on their E&O!  He felt that the worksheet sent to a client should be completed with their accountant but mentioned that he doesn’t know any accountants who feel comfortable completing these insurance forms.  I then offered our firm’s experience and services to the broker.

We’ll be happy to review Financial Statements and Contracts/Leases/Franchise Agreements and advise on issues like Business Interruption losses, Employee Dishonesty limits, Trade Credit Insurance, etc.  We can assist in working on “replacement cost” determination/evaluation so that you are adequately insured!

Have you ever experienced a loss where you felt you were protected and found out otherwise?  Let your CFO, Controller, Accountant and Lawyer know about us!

We are very pleased to work alongside your other professional advisors and work with you and for you – not against you.

Our costs are always very reasonable.  Why not contact us now for further information?

Brand Reputation – How Important to you is Managing Media Risk to prevent the damage from Negative Press?

December 2, 2009

I won’t take credit for this since my morning e-mail from RightNow Technologies is a promotion of their upcoming webcast and their firm’s services but…do read.

It is a very interesting article re Media Risk and much of what I have been recently stating on my various WRiskManager platforms on Plaxo, Facebook, etc.  I know that a market capitalization reduction of $180 Million caught my attention – how about you?  It could be a much smaller business but how much effort will now be required to rebuild the reputation you have lost?  How much revenue and profit has been foregone by some needless act?  How will your bankers react?

RightNow Webcast: United Breaks Guitars with Dave Carroll

Dave Carroll’s story depicts the value of great customer experience and illustrates that spending a little can save millions when it comes to your brand’s reputation.

In 2008, Dave was flying United Airlines with his band Sons of Maxwell when a passenger sitting next to the window exclaimed that the baggage handlers were “throwing guitars out there.”

Carroll’s guitar was broken. He spent the next nine months in a service maze pursuing compensation. Eventually, customer service at United Airlines told him they were closing the incident and would not respond to any further emails.

Carroll vowed to write three songs about the experience and post them on YouTube, hoping to achieve a million views with all three combined. But he did much better. He hit one million on the first song within one week, and is at six and a half million views at last count. A media frenzy ensued and United’s market capitalization dropped $180 million over the next three weeks.

Register for this live webcast and hear Dave Carroll tell his remarkable story. He will be joined by Jason Mittelstaedt, RightNow’s CMO and Bruce Temkin, Vice President & Principal Analyst at Forrester Research, for a discussion on customer experience in the age of the social web.

There’s no better way to understand how powerful the voice of the consumer has become than to attend this webcast.

View the United Breaks Guitars video.

Join us:

Thursday, December 10, 2009
11:00 a.m. – 12:00 p.m. Pacific
2:00 p.m. – 3:00 p.m. Eastern

Register Now!

See you on the 10th,
RightNow

136 Enterprise Blvd. | Bozeman | MT | 59718 | 866.630.7669 |

http://www.rightnow.com/summit/Americas/2009/presentations/dave_carroll_tues.php

What else can I say about managing media for both positive and negative reaction – the value of ensuring positive images will definitely outweigh the negative as seen here from the views of YouTube and what someone has now done.  Am I not correct in emphasizing managing positive media as opposed to the damage done from something like this?

There are countless examples of companies who do not emphasize the importance of “perception” and how the public perceives their image of one’s business.  Not training your staff to contemplate the damage that can be done by one little act will cost so much more in lost revenues and profits than any employee will ever realize.  Can this cost be managed?  You bet!  But not by standard Risk Transfer – Insurance!  Only by better training, support, etc. can you ever manage media risk which, in my mind, is a very worthwhile investment in your business.

Use expert Risk Management to reduce the consequences of a similar occurrence happening to you!  Contact the WRiskManager today – larryewinsurance@gmail.com 

RISK – My 1st Post! – Well, at least it is #1 for here (and maybe better than my other attempts)

October 22, 2009

This is my first blog attempt here and I hope better than my previous efforts 🙂 .

I have just had the most amazing week in so many ways that my excitement is bubbling over, hehe.  Reason for this is that I wished one of my many online friends a Happy Birthday on Friday last week and he (Craig, you know who you are) then proceeded to offer me immense advice on blogging and setting-up my blog on this site 🙂 .  He explained that I should be blogging every time I see, meet or hear something about “risk” since that is my expertise.  Well, here goes my effort then.

So, what else made my week so spectacular?  Well, one call to a friend of mine (Mike B.) that led to a request to speak to a group of bankers, accountants, advisors, etc. and then an e-mail from another good friend of mine (Mike A.) to gauge my interest to speak for 1.25 hours early next year to a group of Managers and then a follow-up Skype message (Andy – No, not another Mike hehe) re another speech to a group of independent management advisors – this all on Friday!

I then proceeded to mentor another online friend (Victoria) who is making a career move from agent to commercial broker and I offered my years of experience and continuing guidance to assist her.  Even in the same geographic area, it is much easier to use phone/computer communication than managing the headaches derived from fighting traffic to meet face to face.

What else has happened since Friday, then?  Well, I’ve been working with a management consultant friend of mine on his one client’s insurance requirements and ensuring that they’ve been met at affordable premiums.  I’ve provided two contacts’ names/info to another contact of mine who is in need of their services, been provided a list of 50 lenders by a new online connection (sure is nice to share contacts who can recommend me) so that my work during the next week will be quite busy in prospecting.

Well, you can see where my excitement originates from, correct?

What do I do, though?  I work in Risk Management – identifying and analyzing risks, controlling and financing risks.  My expertise is derived from nearly 20 years of Retail Commercial Banking and 20+ years of Insurance/Risk Management.  I work in the realm of Legal Contracts & Leases to Financial Statements through the spectrum of Property, Liability, Income and Human Resources and include Currency, FX, Interest Rate (yes, I did work in Banking), Employee Dishonesty, Media, Trade Credit, Business Continuity and Continuation Planning, Workers’ Compensation and Occupational Health & Safety – a broad spectrum.

Where do I spend the bulk of my time?  I review various Lenders’ Loan Agreements and Borrowers’ Insurance Policies for compliance with the terms/conditions of a Loan, recommending improved security where appropriate and knowing when a particular condition may be waived, as needed.  I even was called upon by a Lender during this week to recommend whether a loan condition for a “seismic report” be required or not – the Borrower already had Earthquake insurance and was located in a zone known to have activity so that I recommended the file be notated to never allow the Borrower to not include “quake” coverage on the policy.

As you can see, a busy and interesting week.  Not knowing when to curtail my comments, I will sign off now and be back later in the week to add something new.