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 ,