FIRKIN INSURANCE
Firkin Insurance
BY: SEAN M. AHERN, CIC, CIRMS VICE PRESIDENT, JGS INSURANCE
A Lighthearted Look At the Dark Side Of Insurance
Now before you go and call the FCC, firkin is not a curse word! A recent tour of a local brewery enlightened me to the word, which describes a small wooden barrel or metal keg which holds 10.8 US gallons.
After some adequate sampling of the brewery’ s best, I had an epiphany: considering my thirty years of experience in the insurance business, what a perfect name for an insurance agency!
Think about it. When I call a client, the receptionist would be able to proudly announce it was the Firkin insurance agent! Similarly, when invoices were received, the person opening the mail would be able to mutter,“ Another Firkin insurance bill.” And at the time of a claim, if things weren’ t moving quickly enough for insured, they could complain to the heavens about how their Firkin insurance was just no good!
WHO CAN WE BLAME FOR INSURANCE?
Many of us have heard of Lloyds of London and the early shipping industry to the New World and how, if it wasn’ t for insurance, no one would have been able to afford to take the risk of transporting goods across the seas. Later, Ben Franklin was credited for putting together some of the first fire insurance companies in Philadelphia, many of which still operate today.
So it’ s people like these we can blame.
The first insurance contracts were probably pretty simple. Over time, insurance companies soon found they were giving away too much coverage, so they implemented numerous conditions and exclusions as a way to help control losses, keep premiums reasonable and make insureds more careful in their operations.
As a result, insurance contracts are now very complex documents, written in their own unique language. And yes, they are integral not only to our daily lives, but also to practically every operation and function in the world. That’ s why insurance professionals need continuing and specialized education and experience to get it right.
When someone asks me what seems to be a simple question, it often takes a while to fully and accurately explain the answer. I’ ve seen people’ s eyes glaze over numerous times when all they want is a simple“ yes” or“ no” answer. But with insurance, it may not be so easy to explain things as black or white, yes or no, covered or not covered— so often my answer starts with,“ It depends.”
COMMUNITY ASSOCIATION COVERAGE
Coverage for your community association isn’ t just one policy but rather a coordinated plan made up of several policies. The policies must work together seamlessly, without overlapping coverages that would be a waste of money. Though there are important changes that can be made by endorsement, the bulk of each policy is a firm, written contract. It is here that your insurance broker must be an expert and help the board make the right coverage choices. Some insurance companies specialize in condominium association policies, but really, most do not, and in fact, many would never dream of insuring a condo. To make matters worse, some carriers come into the world of community associations and then quickly exit, leaving you to find a new carrier.
At this point, it’ s important to realize the insurance marketplace is basically made up of two markets— the standard market( for basic businesses, accounts with good loss histories, auto and homeowners, etc.), and the excess / surplus market( for high-risk exposures and basically everything else that is insurable). The standard market, as its name implies, is there to cover basic, not overly high-risk, accounts. The excess surplus market is there to cover very risky exposures, those with a higher propensity for loss.
Insurance contracts found in the standard market can contain somewhat standardized wording thanks to Insurance Services Organization( ISO). In the excess / surplus market, insurance companies come up with their own wording, so it’ s here you’ ve really got to read and watch out for every word. Here is where the value of your insurance broker is proven, analyzing coverage nuances and thinking through the“ what ifs.” If your association looks good and is well maintained and your loss history is good, you’ ll be able to get coverage in the standard market. But if things start to get unraveled, maintenance is ignored, and losses start to pile up, you may only be able to get coverage in the excess / surplus market, and that’ s where prices can climb into the stratosphere.
HOW TO GET THE MOST OUT OF YOUR FIRKIN BROKER
In order to write business in any state, your insurance broker must first become licensed in that state. The licensing exam requires a great deal of study and is comprehensive. Some brokers write insurance in practically all fields, insuring manufacturers, hospitals, law firms, and bakeries. Other brokers tend to specialize in community associations. Brokerages vary widely in size, from the small main street operation which may specialize in personal, homeowners, and auto policies, all the way up to the mega brokerages with names that are known worldwide with hundreds of employees. The choice is yours.
Before you choose your brokerage firm,
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