Ask Tim

Seeing Fireworks

It's the day after the Fourth of July, but that doesn't mean the celebrations are over. Really, having the holiday on a Wednesday just enables the party to last through the weekend. Independence Day means all the traditional American rituals -- baseball, hot dogs, apple pie ... and fireworks.

Fireworks displays are synonymous with summer here in the U.S. of A. I can't imagine a summer without them. When handled by qualified professionals, fireworks can make you laugh or just gape in amazement at the spectacle unfolding in the skies.

Unfortunately, lots of people try to have their own homegrown fireworks displays, and the results can be as bad as it gets. According to the U.S. Consumer Products Safety Commission, during the month surrounding July 4, an average of 200 people will visit emergency rooms every day due to incidents involving fireworks. Nearly half of those injuries are to fingers and hands, more than half are burns, and two-thirds will be to the male of the species (who apparently don't have enough ways to maim or kill themselves.) In 2011, four deaths were related to the use of fireworks.

Medical insurance obviously becomes involved in accidents like these (sidenote: 45 percent of injuries occur to the "young and healthy" people under age 25 who supposedly don't need health insurance.) However, the liability coverage in a homeowners insurance policy may come into play if someone who is just watching the fireworks gets hurt. From a safety and insurance standpoint, it makes sense to take great care with these explosives.

So, if you feel you must ignore New York law and drive across the state line to buy fireworks, please follow these recommendations from the CPSC so that you will retain all 10 fingers:

• Keep them away from kids. We tell kids not to play with matches for a reason.
• Do not try to re-light or pick up fireworks that have not fully ignited. The main event could occur just as you do.
• Keep a water source on hand (hose, bucket filled with water) in case things go wrong.
• Light them one at a time and stand back from them.
• Don't shoot them off in metal or glass containers (can you say, "shrapnel"?)

And a few last pieces of advice that should go without saying, but I'll say them anyway:

• Don't point them at people before shooting them off. Your aim may be better than you think.
• Drinking alcoholic beverages and shooting off fireworks is a bad idea on more levels than I have to time to count. If you've been pounding beers, watch the display from a safe distance. On TV, for instance.

And have a fun and safe summer.

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Should Insurers Look at ‘New Trajectory of Growth’?

Insurance Information Institute president and former IIABNY director Bob Hartwig has some advice for U.S. insurance carriers:

The insurance industry “needs to not just ride the rising tide in,” he says. “There is a new trajectory of growth in the American economy.”

Uncharacteristic industries not typically involved in economic rescue are leading the way, paving a road to opportunity for insurers who recognize it, says Hartwig, who recently gave a presentation at the National Association of Mutual Insurance Companies’ Claims Conference in Savannah, Ga.

Energy, natural resources, agriculture, health care, and transportation and infrastructure are at the beginning stages as the country’s newest growth engines, Hartwig says.

“And many insurers would find that they are underexposed to these sectors,” Hartwig says.

via www.propertycasualty360.com

Hartwig says that the insurance industry needs to venture into some different waters if it wants to take advantage of a recovering economy. Waiting for a hard market to bring sharply higher rates, he says, is a mistake. In his opinion, the real opportunities for improved profitability lie in some fairly hazardous industries. In my old commercial underwriting days, I might have ended up in solitary confinement if I had written energy or mining accounts. We had a program for some fruit and vegetable farms, but we didn't make a big push for agriculture business, either.

Hartwig's opinion makes intuitive sense to me, but I wonder whether insurers who are nervous about their loss ratios will buy it. Particularly in the Workers' Compensation arena, the classes Hartwig is talking about can produce some severe losses. The loss potential must put a scare into any rational underwriter. Still, if his predictions are correct, and insurers can reap the benefits of growing exposure bases, timidity may result in golden opportunities lost.

What do you think? Do you agree with his conclusions? Will insurers aggressively pursue these accounts? Start the discussion in the comments.

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Catch This: Merrill Lynch Must Repay Ballplayer

Former Red Sox Catcher Wins Claim Against Merrill

Former Red Sox catcher Doug Mirabelli has earned another victory, this time off the field.

An arbitration panel ruled on Jan. 13 that Merrill Lynch must repay Mirabelli more than $1.2 million in damages and fees for providing inappropriate investment advice to the two-time World Series champion and his wife, Kristin.

“It’s rare for a FINRA (Financial Industry Regulatory Authority) arbitration panel to award every dollar amount of out-of-pocket loss,” said Barry Lax, Mirabelli’s lawyer, in an interview.

Lax estimates that less than 5 percent of the cases he has dealt with in his roughly 20 years in the industry have resulted in this type of full-repayment ruling — where the claimant receives the complete original investment, in addition to all legal fees and associated arbitration costs.

“The panel basically put the Mirabelli’s back in a position that they would have been in had they never met Phil Scott (the Merrill Lynch adviser),” he said.

The case was argued against one of Merrill’s top advisers, Scott, a Bellevue, Washington-based broker who has been with Merrill for nearly three decades. Scott was ranked the top adviser in Washington State last year by Barron’s and managed about $1.1 billion in client assets.

The Mirabelli’s invested about $1.8 million, all of their liquid assets, with Scott in early 2008, according to Lax. Scott then put those assets into his team’s income portfolio, which is made up of 33 dividend-paying growth stocks.

Because the account was collateralized through loans, if the value of the account fell below $1 million in value, they would need to sell out of the securities held in the accounts — which is what happened in November 2008, amid an industry-wide meltdown of financial markets.

The result was a roughly $800,000 loss for the Mirabelli’s.

Lawyers for the couple argued that Scott put the Mirabelli’s assets in “inappropriate” investments, offering the recommendation and purchase of unsuitable securities; in this case, an all-growth stock portfolio.

Merrill Lynch spokesman Bill Halldin said the firm disagreed with the panel’s decision, given the facts presented in the case.

“This account was handled properly during a very difficult time when there was extreme market volatility,” he said.

(Reporting By Ashley Lau; Editing by Bernard Orr)

via www.insurancejournal.com

Doug Mirabelli had to catch Tim Wakefield's knuckleball all those years he was with the Red Sox. In my opinion, the $1.2 million is hazard pay.

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Webinar Recording: Top Tips for Blogging Success

This is a little off the beaten insurance path, but I attended a 15-minute webinar presented by Site-Seeker, Inc. yesterday and found it to be very informative. I've been writing this blog for a few years now, but I picked up a few tips that hadn't occurred to me before. If you have a blog or are thinking about launching one, this presentation is well worth your time. Site-Seeker also makes the PowerPoint slides available at slideshare.net.

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Is the Soft Market Finally Over?

MarketScout: P&C Rates Rise for Second Straight Month in December

By Mark E. Ruquet, PropertyCasualty360.com

January 5, 2012

  171

NU Online News Service, Jan. 5, 12:13 p.m. EST

The year 2011 came to a close with firm evidence that the soft market has ended, according to the latest figures released by the electronic insurance exchange MarketScout.

Average property and casualty rates rose 1 percent, according the Dallas-based company.

This marks the second consecutive month of increase in the MarketScout barometer.

via www.propertycasualty360.com

According to MarketScout, the answer is yes. Average P&C rates rose in both November and December, though the increase in December was a fairly modest one percent. We're a long way from hard market territory.

The question becomes, is this sustainable? The government announced today that private employers added 212,000 jobs last month and almost two million jobs last year (job cuts in the public sector reduced the number of net new jobs created to 1.6 million.) With the economy at last starting to show some legs, will insurers let rising payrolls and sales boost their premiums, or will they continue to dip their toes in the rate-increase waters?

Much of the answer depends on the 2012 storm season, which, if 2011 is any guide, starts much earlier than June now (think tornadoes.) Another year like last year will make underwriting discipline and rate strengthening the talk of the town.

Make sure your seatbelts are fastened and your seats and trays are in the upright position. It's going to be an interesting year.

What do you expect to see in the markets in 2012? Leave your predictions (which I will be able to conveniently haul out next December) in the comments.

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Holiday Greetings

It's Thursday afternoon, and I'm closing up the Geek Cave for the week. I want to get a head start on my Christmas shopping. Before I go, I just want to thank all of you for the support you've given this blog and the podcast during 2011. I hope you've enjoyed reading and watching as much as I enjoyed creating it.

Whichever of the three major holidays (Christmas, Chanukah and Kwanzaa) you celebrate, or if you don't celebrate any of them, I wish you a happy and blessed time over the next several days. Rest up, because 2012 will be even busier than this year was. Why, someone in the office just told me something about there being an election next year. I wonder if there's anything in the papers about that...

I'll leave you with some holiday giggles, courtesy of an a capella Celtic music group from Denver called Pandora Celtica. If you like this song, I heartily encourage you to check them out. 

Always look on the geek side of life. 

Santa-is-Missing

(Drag your mouse over the left side of the box to access the PLAY button)

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Why the Financial Crisis in Europe Matters To the Insurance Industry

Perhaps you've seen the headlines or half-listened to the stories in the news about the financial crisis in the Eurozone. Maybe you've thought, "That's a European problem; it doesn't affect me." If so, you're wrong.

Here's why:

A.M. Best Places Ratings of Fireman's Fund Insurance Companies Under Review with Negative Implications

OLDWICK, N.J., DECEMBER 19, 2011
A.M. Best Co. has placed under review with negative implications and affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of "a+" of Fireman's Fund Insurance Companies (Fireman's Fund), which includes Fireman's Fund Insurance Company(Novato, CA) and its intercompany pool participants and reinsured affiliates. (See below for a detailed list of the companies and ratings.)

These rating actions follow the downgrading of the ICR and the placing of the ratings under review with negative implications of the group's ultimate parent company, Allianz Societas Europaea (Allianz SE). The actions on Allianz SE's ratings resulted from the company's exposure to investments in several peripheral eurozone economies, Italy in particular, as well as its investment exposure to eurozone banks. 

A.M. Best has been actively monitoring the continued deterioration of the sovereign creditworthiness of several eurozone countries and the negative economic outlook for the region and released reports on the insurance industry exposure to these events in September and November of this year. The perceived strain on the economies of these countries—most notably Italy and Spain—and companies operating within their borders is growing rapidly with very little evidence of a solution being formulated to address near-term concerns. The rationale for taking rating action at this point is largely attributable to the current level of credit and liquidity risk for insurers operating within these countries, including Allianz SE.

The ratings for Fireman's Fund and its parent, Allianz SE, will remain under review with negative implications while A.M. Best examines these companies' exposure to a prolonged adverse economic environment within the eurozone. Of particular concern to A.M. Best is the exposure to Italy and Spain's sovereign bonds and the potential for contagion into other asset classes, particularly holdings of European bank securities. In addition, A.M. Best will assess the likely impact of a prolonged financial crisis and recessionary environment on these carriers' market position and ongoing business operations. 

Upward rating actions are unlikely at this point.

Negative rating actions could occur if there were a worsening of risk-adjusted capitalization at Allianz SE tied to investment losses or a deterioration of the operating environment in key territories. Additionally, negative rating action could be taken if Fireman's Fund is deemed not sufficiently strategically important to the global operations of Allianz SE to receive continued rating enhancement. 

Fireman's Fund is a major provider of insurance in this country, and an important source of errors and omissions liability insurance to IIABNY member agents and brokers. This news should make all of us in the industry feel a little less comfortable about how removed we are from the problems in Europe.

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Safety Tips for the Holiday Season

Safety Tips for Decking the Halls

Haul out the holly, string up the lights, and hang the stockings by the chimney (with care)! The holiday season is finally here, which means it’s time to deck the halls with all kinds of festive decorations.   Your Trusted Choice® independent insurance agent wants to ensure your holidays are as merry and bright as possible, so before you adorn your mantle with garland and dangle mistletoe over your door, please read these holiday decorating safety tips.   -  Christmas trees: Trimming the tree is the main decorating event in many households, but the tree can become a fire hazard if it’s dried out. Remember to replenish the water in your tree stand on a daily basis, so that your tree remains healthy and hydrated for the duration of the holiday season. (Also, check out this article  for more Christmas tree safety tips.)   -  Holiday foliage: Poinsettias, holly, Jerusalem cherries, and mistletoe are all toxic if ingested. If you have pets or small children in the house, avoid using these decorations or opt for the artificial versions.   -  Artificial snow: If you’re longing for a white Christmas, spraying windows with artificial snow can give your house a frosty glow – even if you live in a warm climate. However, spray-on snow can irritate your lungs, so make sure to follow the directions carefully and only use the spray in well-ventilated areas.   -  Fireplaces: Adorning the mantle with garlands, stockings, and other decorations is a holiday tradition in many households, but keep these trimmings clear of working fireplaces. You should also be careful when using fire salts, which produce colored flames, since they are highly toxic if ingested.   -  Lights: Before hanging lights indoors or outdoors, check the strings for cracked sockets, broken bulbs, or frayed/bare wires. Also, only use lights that are approved by a national testing lab, such as UL or ETL/ITSNA. Do not use electric lights on metallic trees because faulty lights can cause branches to become charged and possibly electrocute someone. If you’re using outdoor lights, make sure they are approved for that use and plugged into a ground-fault circuit interrupter device.   -  Candles: Flickering candlelight can give your home a cozy, warm glow, but candles cause more than 11,000 fires every year, according to the U.S. Consumer Product Safety Commission. If you’re using candles to decorate for the holidays, keep a close eye on them when they’re lit, and don’t leave the room without extinguishing the flames. Never put a lit candle on a tree.

via www.trustedchoice.com

Your faithful Insurance Geek™ enjoys the holiday season as much as anyone, though the lack of appreciation for the gifts I buy can be frustrating. I spent a lot of money on that Personal Umbrella Policy for my kids last year. I even wrapped it. Sheesh...

Anyway, as you enjoy all the activities this time of year, take a few minutes to review this excellent list of tips from Trusted Choice®. If you're an insurance agent or broker, pass them on to your clients. Let's remember this holiday season for happy reasons.

Now, I must get back to my shopping. If I get them a boat policy this year, we'll just have to get a boat...

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Well, You've Done It Again...

For the second year running, the LexisNexis Insurance Law Community has named Ask Tim as one of the Top Insurance Blogs. I am absolutely thrilled to receive this honor again, and I want to thank each and every one of you for spending your time reading what I have to say. A special thank you to those of you who voiced your support to LexisNexis during the comment period after I coyly mentioned that it would help. 

A lot of other terrific blogs were also honored, including Coverage Counsel, Zalma on Insurance, and The Insurance and Reinsurance Report. These and the others on the list are well worth your time. I encourage you to check them out.

In the mean time, as long as you keep reading, I'll keep writing. Thank you again.

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This is What Great Customer Service is All About

I'm going to take a break from the usual insurance technical discussion today to talk about a wonderful customer service experience I had this afternoon. First, I have a confession to make, and it is this: I can, at times, be an airhead. Not exactly shocking news to those who have known me for a long time, but perhaps a revelation to those who know me only through this blog and the podcast. And I had a rather acute attack of airheadedness a few weeks ago, when I went on Expedia.com to make flight arrangements for this week's Mid-America Technical Conference near St. Louis, Mo. You see, the conference ran from November 6 (Sunday) through today (Tuesday, Nov. 8.) As the only event on Sunday was a reception at 5:30 PM, common sense dictated that I fly out Sunday afternoon. That was certainly my intention.

My mouse-clicking finger apparently had other ideas. As I was preparing to leave Sunday morning, I looked at my flight itinerary for the first time since I bought the ticket two weeks ago, and saw to my horror that I had reserved flights for Saturday, November 5. Yes, I booked my flights for the wrong day, and my reserved flight had taken off nearly 24 hours before. I got on the phone to the airline, explained my mistake, and booked flights for late Sunday that got me to my hotel around midnight.

Here's where things started to fall apart further. You see, I had bought tickets for one airline out, and from another for the trip back to Syracuse (both trips required a connection; there are no direct flights from Syracuse to St. Louis.) Airline A, when it set me up for the new flights on Sunday, applied the payment I had made for the trip to the cost of a one-way ticket to St. Louis and charged me a few hundred bucks additional, without telling me that it was a one-way ticket. My reservation for Tuesday was still intact, but apparently my ticket was not (I don't really understand how you can have a reservation without a ticket, but apparently you can. And people think the insurance business is confusing...) The ticket agent for this airline told me to call the other airline (American Airlines) and confirm my reservation for Tuesday, which I did, and they indeed confirmed it.

Imagine my surprise when I arrived at the St. Louis airport today (two hours before my flight, thank God) and was unable to check in. It was then that I made the acquaintance of two women working at the American Airlines check-in counter, Debbie Burnside and Tracy (her name tag did not show her last name.) They diagnosed the problem and instructed me to visit the other airline's counter (a mere 50 feet or so away) so their agents could clear up the matter. I did, then returned to the AA counter, only to find that the problem was not resolved. Debbie called the other airline. Then she spent several minutes checking out the problem on her computer. Then she called the other airline again, successfully finding a more cooperative person on the other end. At some point, Tracy got on the phone with them and won a promise for them to call back.

Minutes ticked by. Eventually, Debbie went over to the other airline's counter to speak with them. She was gone at least 10 or 15 minutes. When she returned, she told me that they wanted to speak with me directly. I'll spare you all the gory details of what they said, but the upshot was that my mistake had wiped out my previous ticket and that I would have to buy another one for an extra $500. I was, to say the least, unhappy with this news as I returned to the AA counter to buy my ticket (it was either buy a ticket or become a Missouri resident.)

Debbie and Tracy thought this "solution" was bogus, and they went back into action, making phone calls to their own reservations department and whipping through computer screens. In the end, Debbie got me a new ticket at an extra cost of $183 (a far better result than the other airline had said was possible,) overrode a code in the system that had placed a hold on new checkins for my flight because it was supposedly boarding (it wasn't yet,) got me pretty good seats on both flights (toward the fronts of the planes), and even tracked me down in the security line because I had left my printed Expedia itinerary with her and she was afraid I still needed it (I didn't, but it was still very thoughtful of her to come and find me.)

After all this, my flights were uneventful, taking off and landing on time. I'm writing this from the comfort of the upstairs of my house. Here are a few takeaways I have from this experience:

1. Making a flight reservation for the wrong day is a remarkably poor idea. Don't do this.

2. Despite the fact that I made a stupid, careless error and was not very deserving of sympathy, these two women worked very hard to make sure I got home when I planned to. To be honest, it was humbling. They really knocked themselves out for me, and the thanks I gave them was as inadequate as mere words can be. I intend to email a link to this blog post to AA's customer service department, and I truly hope word of it gets back to them and, more importantly, to their bosses. Because of what they did, I will always feel partial to American Airlines. In particular, I encourage anyone who has to fly in or out of St. Louis to consider flying that airline. They deserve your business.

And that's really takeaway #2 -- do not under-estimate the value of superior customer service, whatever your business is. Airline, insurance agency, pizza shop, dry cleaner, whatever -- treat customers like the only care you have in the world is making them happy, and they will be loyal to you. Maybe not all of them will be, but most will. People like to feel that someone cares about them. I know I sure did.

Debbie and Tracy, thank you for helping me get home. The rest of you, take these lessons to heart and apply them in your businesses.

And when you make flight reservations online, for the love of God, make sure you click the right freaking date.

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