In your agency, it’s common practice to review commercial lines account renewals six to eight months in advance, right? Right!

If the account’s workers’ compensation is experience rated, there are some things that may need attention that far in advance. Such vigilance may save insureds big bucks. The stat card that includes audited payroll, class codes and claims experience is submitted months in advance of the renewal and the statistical cut-off date for this information is typically six months prior to renewal.

Errors found on a stat card, a common occurrence with regard to payroll, often can be corrected. However, in most instances, statistical information based on judgment cannot be altered after the cut-off date. Examples include class codes and loss reserves. It is not uncommon for reserves to be closed within days following the stat card cut-off date at a paid amount far less than the reserve amount.

Therefore, it is imperative that audits and reserves be monitored and open claims closed at least six to eight months in advance of renewal. Otherwise, the insured may be stuck with an excessive experience mod and no recourse to have it lowered.

To find out how to ensure your insureds receive the lowest experience mod possible, click here .

“I Am Not an Animal…I Am a Human Being”

That chilling statement made for good drama in the movie "Elephant Man," but how does it relate to insurance? The ISO Personal Auto Policy (PAP) defines "collision" to include impact of an insured auto with another auto or object. Comprehensive, or "other than collision," coverage applies to contact with a bird or animal. So, if you hit a pedestrian, is it a comprehensive or a collision loss?

In other words, is a human an "animal"? The PAP does not define the term in the policy. Therefore, as most courts do, you have to look to other sources such as dictionaries. Several dictionaries define an animal as a living organism other than a human being, especially mammals. Other dictionaries consider biology and say that an animal is a creature within the kingdom of animals, which includes humans.

At best, it’s an ambiguous term. Typically, whenever a term has more than one reasonable interpretation, courts will side with the insured. Also, consider the reasoning behind making contact with an animal a comprehensive, rather than collision, loss because the driver often has no control over the actions of an animal that might dart in front of a moving vehicle. The same can be said about a human under similar circumstance.

One might even argue that if the driver loses control and hits a stationary pedestrian off the roadway, it is a collision. If the pedestrian unexpectedly steps into traffic and is hit, it is contact with an "animal." If there’s any doubt, coverage should be interpreted in favor of the insured. Or, to remove any doubt, simply use the same deductible for comprehensive and collision coverages.

For more information, click here.

Improve Claims Adjusting

According to fraud expert and Big "I" Virtual University faculty member Barry Zalma, JD, insurance fraud takes more than $80 billion from the industry every year. Almost all of those less-than-legitimate claims are paid because:

(1)The adjuster is untrained;

(2)The adjuster is minimally trained;

(3)The adjuster is either unable or unwilling to perform a thorough investigation;

(4)The adjuster is so inexperienced that he or she does not know how to investigate;

(5)The adjuster is unable to read a policy with comprehension;

(6)The insured fraud perpetrator is intelligent, not greedy and knowledgeable;

(7)The insurer does not want to fight because legal costs to fight a fraud exceed the value of the claim;

(8)The adjuster does not recognize the fraud; and/or

(9)Law enforcement authorities refuse to investigate, let alone, prosecute insurance fraud.

Aside from potential fraud, at least half of these alleged problems relate to inexperience or inadequate education, sometimes resulting in either the denial of legitimate claims or payment of uncovered claims.

For more information click here

Bill Wilson (bill.wilson@iiaba.net) is director of the Big "I" Virtual University.