Chemical distributors advised to start early when applying for insurance
Jan 1, 2003 12:00 PM
FOR chemical distributors faced with renewing insurance policies, the key is to “start early,” said John O'Brien, AIG Environmental senior vice-president, New York, New York. He included the advice while discussing the insurance industry at the National Association of Chemical Distributors annual Operations Seminar.
While O'Brien offered advice for renewing policies, he noted that companies can expect a 15 percent to 25 percent increase for general liability coverage, 100 percent to 300 percent for umbrellas, and 5-15 percent for vehicle insurance. Those seeking new policies can expect restricted coverage to accompany rising premium rates.
With costs rising and insurance companies taking a hard look at what they will cover, companies should be diligent in the renewal process, he said. In addition to starting the process well in advance of a policy expiration, managers should meet with their insurance representative to discuss the company's needs for coverage and their history of safety.
In the meeting with agents, managers should point out any security measures that have been put in place since security became a major issue after the September 2001 terrorist attacks on the United States.
He advised a through review of the policy structure, including its limits, deductibles, and coverages. Managers should look for hidden costs, such as fees and broker commissions. He noted that companies should avoid renewal dates of January 1, July 1, or October 1 when insurance companies are at their busiest.
“Focus on what you need,” he said.
Gathering data on an insurance company's economic soundness should be a routine part of selecting a carrier. Managers should ask about the carrier's rating, particularly a report from Standard & Poor's Register of Corporations and and/or Moody's Investor Service. The company's corporate activities also can be followed in the press. Some insurance companies have net worth less than the companies they insure, he said.
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