Neighbors are using their personal boats to rescue Friendswood residents in Houston during Hurricane Harvey.
Steve Gonzales/Houston Chronicle
Written by Kelly Tonsing
Each year, we watch in horror as unsuspecting folks—living normal lives similar to our own—are rescued from their rooftops via watercraft after their small town has been ravaged by natural disaster. Most recently, by Hurricanes Jose, Harvey, Irma, and Maria. In news interviews, residents express something along the lines of, “My family and I have lost everything,” or “There’s no way to understand this unless you’re here, living it.”
Do you wonder what happens to these people once the debris settles? Or how they rebuild and attempt to resume normal lives?
According to an article by the Wall Street Journal, only 50 percent of homeowners in Puerto Rico, who are currently facing mass power outages and destruction in the wake of Hurricanes Irma and Maria, have insurance policies protecting them from wind damage.
In Houston, Federal Emergency Management Agency (FEMA) data reveals only about 17 percent (1 in 6) of the homeowners most affected by Harvey have flood insurance policies. This 17 percent likely has—depending on their level of coverage—access to up to $250,000 to rebuild their homes and $100,000 to replace personal belongings.
The other 83 percent, or 5 out of 6 homeowners most affected, however, aren’t as fortunate—they’ve lost their belongings, their homes, and likely decades of hard work and savings, with nothing to show for it and likely no opportunity for short-term recovery. According to one Washington Post article, this group “will be dependent on private charity and government aid, especially grants from Federal Emergency Management Agency.”
Most people don’t realize that FEMA doesn’t pay individuals for any of their personal recovery; rather, they provide low-interest loans to homeowners who lack flood insurance if—and only if—the conditions satisfy FEMA’s specific definition of “flood” and a state of emergency is declared. Every penny of the federal loan must be paid back in full, with interest.
My name is Kelly Tonsing, and I’m a licensed insurance agent at Ascension Insurance, Inc. in North Carolina. As such, I frequently discuss flood insurance (and the lack thereof) with clients who have homeowners’ insurance. When I ask clients why they’ve opted out of such a crucial policy, I typically receive one (or more) of the following responses: “I just can’t afford it,” “My house isn’t in a flood zone,” or, my personal favorite, “I don’t need it—I live on a hill.”
I’m here to talk through each one with you.
I Can’t Afford It.
First, let’s talk about the cost of adding flood insurance to your existing homeowners’ policy. According to ValuePenguin, flood insurance policies purchased in 2017 through the National Flood Insurance Program (NFIP)—a program established in 1968 by the National Flood Insurance Act (NFIA) allowing property and/or homeowners to purchase flood insurance directly from the federal government—averaged $56 per month. In Texas, home of Hurricane Harvey, 2017 flood-insurance premiums through NFIP were only $40 per month (that’s $482 per year—28 percent below the national average).
Other states on the lower end of the premium spectrum include Florida, which is currently experiencing the devastating consequences of Hurricane Irma, Maryland, Arizona, and Alabama. To clarify, rates have less to do with which state you live in and more to do with how far away from water you live and how much coverage you want. Private insurance rates may be even more competitive compared to those of NFIP’s.
According to FEMA, there are also other great opportunities for discounts and steps you can take to mitigate risk and lower your monthly flood-insurance premiums.
So, for the same cost as a monthly fast-food run for four, you could instead implement flood-insurance coverage, which—in the event of a damaging flood—would provide you the monetary support to rebuild your home and purchase new belongings (e.g., furniture, clothing, a television, etc.) for you and your family.
I Don’t Live in a Flood Zone.
This is one of the most common explanations I hear for not protecting one’s property from the possibility of flooding. According to FEMA, more than 20 percent of flood claims in the U.S. originate from owners of properties outside a designated “high risk” flood zone. According to an article by Maggie Koerth-Baker, senior science writer for FiveThirtyEight, that number in Houston is currently closer to 30 or 40 percent. She goes on to argue that the entire concept of the 100-year floodplain is misunderstood, and designated flood zones are “best understood as estimates—and not necessarily very reliable ones.”
Not sure if you live in a flood zone? Each year, FEMA publishes maps detailing flood hazards and showing flood risk levels “based on historical climate information and the best available science.” To check out the map for your area, click here. To view your area’s flood history, check out FEMA’s interactive visualization tool here.
I’m Safe—I Live on a Hill.
For those who live on a hill or atop a mountain, it is still wise to consider the possibility of flooding from rainfall. Consider my family’s personal anecdote: We own a mountain house located on the Blue Ridge parkway, a beautiful scenic highway in North Carolina and Virginia. Although located at an elevation of approximately 1,850 feet, the home incurred severe water damage from rainfall washing down the mountain.
Mudslides, caused by excessive rainfall, occur regularly in mountainous communities and have been known to completely wipe out homes’ walls and foundations. Without flood insurance, the full financial burden for necessary repairs after such an event falls solely on the shoulders of the homeowner. What would you do if your home in the mountains was severely damaged by rainwater flooding or a mudslide? Have you considered the potential financial devastation and how you might recover?
It’s time to take a serious look at flood insurance to protect you, your loved ones, and your property from one of the costliest natural disasters in the United States. Here are some startling statistics from Risk Analysis, An Official Publication of the Society for Risk Analysis:
- “From 1996 to 2007, insured residential flood losses alone totaled over $26 billion (approx. $2 billion per year)”
- “Average annual property damage cause by floods has increased 54 times over the last four decades, from $51 million in the 1960s to $2.77 billion per year in the 2000s (2000-2008).”
- The authors use statistical evidence to argue that the flood problem in the United States will only continue to worsen, and property damage will intensify.
If you need more reasons to consider flood insurance, watch this story about two property owners who underwent the same natural disaster in 2009 and had very different experiences.
About the Author
Kelly Tonsing manages Ascension’s Personal Lines Practice in our eastern region. She is charged with the strategic direction of the department and for providing an excellent client experience to more than 10,000 policyholders. Upon joining the insurance industry, Kelly found her true passion and skill for leading others in a business built on the value of relationships. She enjoys writing blogs to share her knowledge of and experience in the insurance industry in an approachable and caring way. Connect with her on LinkedIn!
Written by Kelly Tonsing
Traditionally, personal umbrella insurance policies have been reserved for the rich and famous. Today, however, “personal umbrellas” are becoming a standard purchase for many middle-class insurance buyers who understand their risk in a litigious economy. Adding significant personal coverage at an insignificant cost, umbrella policies offer an extra layer of liability protection on top of one’s home or auto policy. Just as the name suggests, personal umbrella policies are designed to shield you from a very rainy day.
Are You at Risk?
Here are a few hypothetical—but realistic—scenarios that might prompt you to consider the value of an umbrella policy:
- Scenario 1:
You hire a professional painter to paint the trim around the top of your house. He falls off his ladder and is killed on impact. Even though the painter is found partially responsible for his fall, the case results in a $1.5 million settlement to his survivors. In this instance, would your current homeowner insurance policy provide you the necessary protection? - Scenario 2:
Your daughter is turning 16 and wants to celebrate by having her friends over for a pool party in the backyard. One of the teens, showing off, decides to do a backflip into the shallow end of the pool. His face collides with the bottom of the pool, causing major damage to his jaw, teeth, and eye socket. You learn from his parents and the doctor that the boy will require months of reconstructive surgeries to repair the damage. Would you be prepared to write a check to cover his medical expenses? - Scenario 3:
While driving to work, you accidentally bump your thermos from your cup holder. As you reach for the thermos to prevent hot coffee from spilling all over your lap, you strike a bicyclist in a crosswalk. The bicyclist, who also happens to be a doctor, incurs injuries including a concussion and a broken pelvis. As a result, he must undergo extensive physical therapy and is not able to work for four months. His annual income is $350,000, which means, as a direct result of the accident, he loses $120,000 in wages and accrues more than $500,000 in medical expenses. What level of liability does your auto policy include? Do you have enough equity in your house to cover this? How about in your retirement account?
These situations are commonplace and can happen to anyone. Just one lawsuit from an injury or accidental death could cost you millions of dollars—enough to wipe out your savings and retirement accounts. Because you are liable for a court-ordered settlement, even your future wages are at risk.
If you have assets (e.g., homes, retirement accounts, brokerage accounts, and/or cars), you are at risk to lose everything, as basic policies only cover a small portion of these possessions. Ask your agent to fill out an asset worksheet to determine whether or not you could benefit from a personal-umbrella policy. Because when the clouds roll in, you’ll want to stay dry.
Technological breakthroughs in self-driving—AKA autonomous—vehicles are dramatically changing life on the highway. The transition to machine-led driving is affecting how consumers and the auto and insurance industries view auto coverage. As this market continues to develop, the Ascension Transportation Practice is monitoring developments and sharing our take and the observations of others, with you.
We are currently seeing two ways autonomous vehicles are affecting the risk-management and insurance landscape:
Effect #1: Risk is Shifting
Autonomous vehicles are proving to be safer than human-piloted ones. Crash rates for Teslas have dropped 40 percent since the company introduced Autopilot technology. This trend is starting to directly affect the cost of auto liability insurance. In response, Farmers Insurance recently reduced premiums 25 percent for a ride-sharing firm that uses Teslas in its fleet.
Commentators note that over time, driverless cars will shift liability to the manufacturer. Accenture’s Head of Global Insurance sees greater products liability and cybersecurity exposures ahead.
Effect #2: The Way We Buy Auto Insurance is Changing
In a recent Berkshire Hathaway briefing, Warren Buffet indicated that the increased prevalence of autonomous vehicles and artificial intelligence is a threat to the current business models of traditional players like its auto-insurance subsidiary, Geico.
New players like Google, Apple, Amazon, Verizon and Tesla are in an excellent position to disrupt the industry and corner as much as 20% of the auto insurance market. Tesla is already selling insurance with its vehicles in Australia and Hong Kong.
Why Does This Matter to the Transportation Industry?
With the introduction of self-driving cars, humans inside the vehicles will essentially become passengers. Who will be held responsible for accidents and malfunctions—the driver, owner, manufacturer, or all? Much of the focus of that debate, to date, has been on cars. However, Google subsidiary Waymo has begun quietly testing autonomous vehicle technology on Peterbilt semi-trucks. In the transportation sector, self-driving won’t mean driverless. It’s likely a trucker will still be in the cab, most likely sitting in the driver’s seat, ready to take control if something goes wrong. In that scenario, insurers will need to consider potential risks to the drivers, their loads, and other passengers and cars, as well as who (or what) is ultimately held responsible.
This post is brought to you by the specialists in Relation’s transportation practice group. Do you have an interest in this topic? Get in touch.
Written by Kelly Tonsing
Kelly Tonsing manages Ascension’s Personal Lines Practice in our eastern region. Although she spends each and every day examining insurance policies, managing claims processing, and ensuring the best available protection for our clients, she hadn’t yet examined the fine print of her own car insurance. Until the unthinkable happened. Read below to learn more about Kelly’s dangerous auto accident, and how she wished she would have read this crucial advice before starting her ignition that morning. Hindsight is often 20/20, but perhaps, with Kelly’s testimonial, foresight may be as well.
Months ago, I had my first real automobile accident. Having been in insurance for years, I had always approached the auto claims experience from an academic perspective. But there is no better teacher than real life. After my accident, I gained some insight that I hope you never have to learn the hard way.
My auto accident occurred at an intersection, when a vehicle collided with my passenger door at 45 mph—and I was deemed “at fault.” Consequently, my liability insurance had to pay out approximately $46,000. Every one of my six airbags deployed, protecting my face and head from injury, but shattering my left hand and wrist. My vehicle was totaled and carted off to the proverbial auto cemetery, never to grace the roads of Charlotte again. God rest her soul—she gave her life for me!
This experience and subsequent claims process provided me valuable insight that, had I known it before, would have saved me time, money, and headache. Here are some things you might want to take a look at on your own policy before you have a claim:
- GAP INSURANCE
Always, ALWAYS buy gap insurance on a newly purchased vehicle that you finance—even when you purchased used and believe you got the deal of the century. The total paid out by my insurance on the depreciated vehicle was not nearly enough to pay off my auto loan. Had I not had gap insurance at the time of the accident, I would have faced a new-vehicle purchase without a trade in, which would mean paying off my prior auto loan and adding a new replacement-car payment. Ascension does not offer gap insurance, so I would recommend speaking with your financial institution about your options.
- AIRBAGS
Airbags really do save lives. As I mentioned, my airbags shattered my hand and wrist, but they saved my life. Because broken is always better than dead, I will always choose autos with as many airbags as possible going forward.
- NEW-CAR REPLACEMENT
If you have a vehicle fewer than three years old, ask your agent about new-car-replacement coverage, which allows you to replace your vehicle regardless of the depreciation. Check the fine print with your carrier, as carriers differ on the age allowed for this coverage. It is a great bang for your buck if you happen to total your vehicle, which, as I discovered first-hand, is not hard to do when airbags deploy.
- RENTAL REIMBURSEMENT
I am used to driving an SUV, which is typically not a rental option under the standard $30/day allotment. For $10 per year (less than a dollar per month) additional premium, your daily rental allowance will be bumped to $50/day, which makes all the difference if you rely on a larger vehicle for daily transportation. To maximize comfortability and return on investment, check your policy to ensure you do not decline this coverage or choose a lower limit, as an extra dollar per month could mean an added monthly allowance of $600 ($900 with the $30/day allowance versus $1,500 with the $50/day allowance).
- MED PAY
Med Pay is the coverage on our auto policy that can be used for anyone in your vehicle who might be hurt in an accident to use toward their health-insurance deductible, including yourself. Luckily, my accident occurred in the final three months of the calendar year, and I was less than $1,000 away from meeting my health insurance out-of-pocket maximum on a high-deductible plan.
However, what if the accident had occurred in January? My ambulance ride to the nearest hospital ran $1,500, and my associated emergency-room costs neared $8,000. My wrist surgery was $20,000. Not to mention physical therapy twice weekly for several months at more than $100 per visit. I was quickly racking up medical expenses, but luckily for me, my Med Pay on my auto policy exceeded my health insurance deductible. This was the most significant lesson I learned from my accident; in an age where high-deductible health insurance plans seem to be the norm instead of the exception, make sure your Med Pay coverage will help you meet that deductible. If you, like me, have a high-deductible health plan, resist the urge to cut corners to save a few dollars on your Med Pay coverage. It is not a huge expense to raise that from $2,000 to $5,000, but, I assure you, paying a few extra dollars a month for higher Med Pay coverage is worth every extra dollar you spend if you are in an accident during which someone gets hurt.
- LIABILITY LIMITS
What if the other person in the accident had been the one to go to the hospital in an ambulance with broken bones instead of me? My liability would have had to pay for her property ($50,000) and her medical expenses (already more than $60,000 for me, and still rising). Limits of $100,000/$300,000/$50,000 would have been completely exhausted in about two weeks and I would have had to cover the rest personally through whatever means I had available, even future paychecks if necessary. What most people don’t understand is that the limits of your policy don’t determine what you are liable for, only what insurance will pay out toward your liability. The state of NC only requires us to have $30,000/$60,000 in liability coverage on our auto policy, and that is devastatingly inadequate.
Meeting those state minimum requirements leaves all of your assets exposed and you could find yourself in serious financial trouble. A court can go after your future wages, children’s college funds, your savings, even your investment portfolio, leaving all those years of putting away for retirement evaporated because you saved $10 per month to have lower liability limits.
At the end of the day, we are all required to have auto insurance to drive a vehicle, and I’ve never been in a serious accident before this one. At fifty-something years old, I thought the current limits of my policy were adequate, but we don’t get to schedule bad luck for convenience and budgets. After this experience, I immediately raised my med pay coverage to $5,000. I don’t plan to be in another accident, but if I am, I want to know that my minimum out-of-pocket for injuries in my vehicle will be covered by my combined auto and health insurance, and that my auto policy will pay the bulk of that health-insurance deductible.
During my years of working in insurance, I have never had someone complain after a claim to say they had too much insurance coverage. Usually clients get upset that something is not covered even if that coverage was offered and declined. But for just the cost of a nice lunch each month, you too can have the peace of mind knowing that you’ll have everything covered if you should ever need it.
These are the thoughts I had after my experience, and I hope you will find them useful. Talk to your agent today to make sure you have the right coverage limits.
If you are considering making a career move to Ascension Insurance, Inc. (and I hope you are!), allow me to offer you the insider’s perspective from someone who has six months under her belt.
First, a little bit about me. Like most millennials, I want to be part of an innovative, cutting-edge organization. When the opportunity to join the Ascension Human Resources team came up, I initially felt as though I’d be taking a huge leap. I wasn’t actively looking for a new opportunity, and I was happily working from home, at a job I was good at and enjoyed. And to be honest, when thinking on the insurance industry, “innovative” and “cutting edge” weren’t the first words to come to mind. Besides, I knew it would take a lot to make me feel like driving into work, every day, again.
But after spending some time in the Ascension world, my perspective shifted. Ascension seeks out people who complement its company culture, so the interview process is thorough—mine comprised two phone interviews followed by two in-person meetings. One thing I noticed, which is what ultimately led me to accept the job offer, was present throughout the interviewing process: the employees’ caring attitude, at every level of the company.
A few weeks into my new role, I attended a sales-leadership meeting at our corporate headquarters in Walnut Creek, CA. Upon arriving, I was given a tour. Every person we ran into stopped and greeted me as they would a longtime friend. The President & COO, Ed Page, and the CEO, Joe Tatum, waved us into Ed’s office as we passed by. I introduced myself, but they already knew who I was, and asked me about my March Madness brackets. Later, at the sales meeting, Joe asked me, with sincerity and a genuine curiosity, what my thoughts were on key initiatives, pain points, room for improvement, and various other topics. Does that kind of welcome and soliciting of input happen everywhere?
Here are a few other things that have stood out to me in the last six months:
- People here really care about one another. They’re dedicated to each other’s success, and they work hard to help one another.
- We celebrate small victories on a day-to-day basis, which keeps morale high.
- Birthdays, work anniversaries, and/or retirements don’t go unnoticed by colleagues, who quickly become friends.
- If you’re lucky enough to work in the Overland Park, KS office as I do, you’ll never go hungry!
- Ascension IS cutting edge and innovative.
- Everything you do and every initiative you see through, results in a measurable, meaningful value-add that gets traced back to you.
- Even with 450+ employees, the executive team is accessible and transparent. I can pick up the phone and call any one of them. They know who I am, and they take the time to listen and help if necessary.
Many of my coworkers have been here for thirty, forty years, and that makes this a special place. We aren’t looking for warm bodies to fill roles here. We want “A” players, the best of the best. And once you’re in the Ascension family, you’re in. To me, that’s worth jumping in my car every day. To fully understand what it means to be a part of the Ascension family, you’ll have to join us and find out for yourself!
Click here to visit our Careers center and learn more about how you can join us!
Written by Ed Page
More than twenty years ago, when I completed business school, my parents gifted me a Coach briefcase as a graduation present. It was beautiful and it was also very expensive—more than $500 at the time. I loved this briefcase, both because it was beautiful and because it came from my parents, and I used it every day as I embarked upon my new career as a consultant at Bain & Company.
I’d owned the briefcase for about two years, when the handle broke. I took the briefcase back to Coach and they informed me they could repair it and it would take several weeks—or, they would happily give me a brand-new replacement of the same briefcase. As it turned out, the exact same briefcase wasn’t available, so they gave me the option of selecting another item of equal or lesser value. I chose a computer briefcase/shoulder bag that was both functional and beautiful. Because it was less expensive than the original one, they also gave me a $50 refund. I was thrilled! Not only did I use that bag for years, I’ve been telling this story with a smile ever since. I still have a fondness for Coach as a result of that experience and have since purchased many more items from them. I walk away every time with a happy feeling because of what I know about their superior customer service.
Fast forward to last month. I was traveling for business and arrived at my hotel in Los Angeles at around 11:00pm after a day that started in another city at 5:00am. I was in a rental car with my luggage in the trunk and pulled up to the valet stand. I got out of my rental car and started to get my bags out of the trunk, while three valet attendants stood there, talking amongst themselves. None of them offered to help me. I’m a pretty self-sufficient guy and don’t mind getting my own bags, but they should have made an effort or offered to help. It was a big enough disconnect that I mentioned it to the hotel management when they asked me about my experience during my stay. The management was kind enough to comp me on the nightly parking charge, but even a month later, the whole experience has left a bad taste in my mouth. Suffice to say I am now open to try a new hotel the next time I’m in Los Angeles, even though—for the past five years—I have stayed there whenever visiting L.A.
I know which one of these experiences I’ll still be talking about twenty years from now. It’s simple: Great customer service matters. Here at Ascension, we all take great pride in going above and beyond—not only for our clients but also for each other. And it shows. Our customer-retention rates are among the highest in the industry—some of our business units even approach 99 percent. We have worked hard to create a culture in which we empower everyone to do the right thing and to go a step beyond to create exceptional experiences for our customers.
Even with our strong track record, we believe the key to continued success is to continually strive to better, which is why I am very excited about our new “Legendary Service” initiative. Legendary Service, written by Ken Blanchard, is a fast and easy read that helps “involve your people in developing an exceptional customer service experience.” We’re in the process of rolling out a training program based on the book to further empower employees to take ownership of driving improvements, innovations, and cost savings at Ascension. Every one of our 480 employees has now received a copy and will finish reading it by the end of this summer.
What is most gratifying about this effort is that it was initiated by two of our North Carolina team members, Jill Zewalk and Kelly Tonsing, and not by members of our executive team. The latter likes to joke that if we had come up with this idea, we probably would have royally messed it up. Instead, Jill and Kelly, along with other members of our service team, are leading the charge, and the leadership team is along for the ride. I feel confident that it will ultimately have a much greater effect because of it. Stay tuned for updates as we move through our training.
Ed Page is President and COO at Ascension. Read his bio here.
by Natalie Zensius
Vice President of Marketing and Communications
I recently made the decision to leave a successful marketing communications consulting practice to join Ascension, full time. It wasn’t triggered by a desire or need for a career change. I was comfortable where I was, and doing what I loved.
Almost a decade’s experience, consulting with some of the top for-profit and nonprofit organizations in the country, has given me lots of challenge and variety. It’s made me a rapid problem solver and has had both an entrepreneurial and altruistic aspect to it. Why then, return to a “job,” and “limit” myself to just one industry?
For one thing, I’ve come to learn that the insurance career path offers myriad opportunities for smart professionals to combine their skills, talents, and interests and apply them in different ways to help serve a wide range of industries and clients. I still get to work on a variety of projects and industries. I’m focused on learning fast and solving the problems big and small that will help my team create world-class marketing products.
And, because what Richard Branson said.
Ascension is much more than just a job. It’s an organization that places great emphasis on culture and teams. It recruits people at the top of their game who highly prize respect, courtesy and relationships and then takes good care of them. As a consultant, I collaborated with the extremely talented professionals at this company. Now, it’s an awesome place to come to work every day–I get to grow and be challenged alongside those same client contacts I established strong relationships with and I’m personally excited to have joined a leadership team that values not just results, but all the team members who create them.
Ascension is continually looking for the best. We’re hiring. Visit our careers section, to learn more.
Natalie Zensius is the Vice President of Marketing and Communications at Ascension Insurance, Inc.
Ascension Insurance, Inc. is a premier insurance agency that offers superior risk management and benefits consulting services across the U.S. It is ranked within the top 50 largest agencies in the country, by revenue, with more than 450 employees in 35 locations nationwide. Ascension is a privately held corporation; together with its private-equity partners, Parthenon Capital and Century Capital Management, the company expects to continue its strong growth trajectory through additional acquisitions and organic growth.
Nut theft is no joking matter—it’s a significant and growing threat to California’s $9 billion+ nut-tree business. With more than 30 nut-theft events in 2015 compared to just one in 2009 and four in 2014, what once warranted only local agricultural area media coverage now garners national mainstream attention. The 2015 price tag? $4.6 million.
That’s enough of a hit to a vital California industry to make the state’s legislature sit up and take notice. Last year, both houses passed a bill—in record time—to establish a statewide, cross-jurisdictional “Agricultural Cargo Theft Working Group.” This funding mechanism would have activated and aligned numerous law-enforcement agencies in helping target these crimes, but Governor Brown unexpectedly vetoed the legislation on September 21, 2016. Additional legislation is in the works to increase criminal penalties for thieves from a misdemeanor to a felony.
Tailoring Insurance Coverage
In the event they are the victim of nut theft, growers should have a strong post-loss solution. As such, it’s important they work with an agent or broker with specialized expertise to ensure they have properly structured insurance placements. The analysis starts with contract review: Who bears the risk, and are there “handoffs” along the path from tree to processor to final end-user? Only when these terms are understood can insurance coverage be negotiated and implemented.
Why Steal Nuts?
- They’re valuable: A truckload of nuts, especially almonds, walnuts, and pistachios, can range from $100-500K.
- They’re in demand: Touted health benefits and drought have strained supply.
- They’re not easily traced: Unlike electronics, nuts don’t have serial numbers!
- They vanish quickly: By the time a theft is discovered, the nuts are often already on a ship or broken into smaller loads and dispersed to out-of-state destinations.
The following approaches are available to growers and distributors:
- Commercial-Package Policy
There may be some coverage for Business Personal Property Stock in Transit under the basic policy form. However, this transit coverage tends to cover only a limited number of perils, so relying on this extension could lead to an uncovered loss. - Cargo/Transit Policy
Once the shipment is in the correct trucking carrier’s control, ensure the trucking carriers’ cargo policies do not exclude theft for any reason other than employee dishonesty, which is excluded by most cargo policies (this can be easily covered with a separate crime policy). Many trucking cargo policies will exclude or limit theft coverage if the vehicle is unattended or if a trailer is dropped. Additionally, consider requiring a crime policy to cover theft by employees of the trucking carrier (including theft by the dispatcher and/or the driver). - Stock-Throughput Policy (STP)
An STP offers growers and distributors the most comprehensive protection: Goods are covered at all times whether they’re being moved, processed, or stored. An STP can be an “all risk” type of insurance policy that provides seamless coverage from end to end and protects against perils including earthquakes, floods, and contamination.
Pre-Loss Risk Control
Growers and distributors should do everything possible on their end to prevent a theft situation, but orchard premises security (i.e., fencing, cameras, a guard service, etc.), is not an end-all-be-all solution. Nut theft is more commonly an act of fraud rather than an act of force.
Perpetrators are often part of organized crime groups, using sophisticated technologies to hack into trucking firms and utilize Department of Transportation databases. “Drivers” show up with high-quality, legitimate-looking paperwork. These forged documents incorporate burner phone numbers and enable thieves to steal shipping information and to quickly move the product to the black market stream of commerce. The thieves, and their loot, become immediately untraceable.
Growers/distributors can take any of the following precautions to prevent theft:
- Develop a relationship with a few select trucking carriers with whom a consistent protocol can be established to confirm the correct drivers are picking up the loads.
- Ensure your computer systems’ security is state-of-the-art, and ask carriers about their data integrity.
- Call the carrier on the phone number provided during the originally contracted shipment and not the phone number given on any shipping documents (given their potential fraudulent nature). Require those firms to advise detailed information at least 24 hours in advance of pick up.
- Get each driver’s license number and thumbprint.
- Photograph both the driver and his/her truck.
- Consider using radio-frequency trackers to ensure the loads end up where intended.
Because of the potential high profits and low risk, nut theft continues to be alluring for thieves and a challenge for growers/distributors. Taking a 360° risk-management approach—contract review, insurance program design, and pre-loss prevention can go a long way towards minimizing or, at best, avoiding exposure to loss.
About the Authors
Greg Merrill is Senior Vice President and Director of Crop Insurance Services of our Pan American business unit. Greg has been helping agribusiness clients manage a wide range of operating risks for more than 13 years.
Andy Sharpe is Regional Transportation Leader for Ascension’s Transure business unit. For more than 15 years, Andy has focused on transportation risk management and insurance, and is a renowned industry specialist.
For the first time since 2010, the Workers’ Compensation Insurance Rating Bureau of California (WCIRB) is changing the formula for calculating experience modifications, effective January 1, 2017. This could impact your Workers’ Compensation premiums.
What is an Experience Modification?
Experience rating is a method that compares an employer to other companies in its industry class based on their historical claims experience. It is expressed as a percentage—called an experience modification factor, or “Ex Mod”—and utilizes past loss experience to help predict future losses. The Ex Mod is applied against premium and either penalizes a company (if its loss experience is worse than the industry average) or rewards it (if its loss experience is better than the industry average). Experience modifications create a powerful incentive for employers to prevent claims and control claims costs.
How is it Currently Calculated?
The experience modification rating process uses what is known as a split point of $7,000. An insured’s actual losses below $7,000 are considered primary and go into the formula at full value. Losses above the split point (to a maximum of $175,000) are considered excess losses and have less weight in the formula. Dividing losses into primary and excess components gives greater weight to loss frequency, which is typically more controllable by the employer, than to loss severity, which is typically caused by less predictable catastrophic claims. The current formula, in effect since 2010, is a one-size-fits-all approach for all employers regardless of company size.
How will it be Calculated Starting January 1, 2017?
WCIRB found that the pattern of claim frequency and severity in California has changed over time, and the single $7,000 fixed split point was “no longer producing optimal results.” On January 1, 2017 it will be implementing a variable split point methodology where, depending on the size of the employer, there will be 94 different primary loss split points between $7,000 and $75,000. Losses above an insured’s split point will no longer be used in the experience modification calculation. The overall effect of the change will be to give greater weight to claims frequency while claims severity, although still a factor, will be limited at no more than $75,000.
What is the Potential Impact?
The WCIRB states: “While the variable split point plan represents a fundamental change in the values used to calculate experience modifications, there is no expectation that experience modifications for California employers as a whole (emphasis added) will change.” However, each individual insured’s experience modification will be dependent not only on its losses, but also on its size. Under the new formula, insureds whose split points increase above the current $7,000 level will have a greater amount of their losses designated as primary and will be more negatively affected by frequency than severity. This in turn could lead to an increase in their Ex Mod. On the positive side, the $75,000 excess cut off limits the impact of catastrophic losses which should especially benefit smaller employers.
This article was first published by Captive Review, and written by Richard Cutcher.
California-based Ascension Insurance Services is expecting to add a second cell to its segregated portfolio company (SPC) in the Cayman Islands.
Captive Review reported in February 2015 AARIS Insurance Company SPC, owned by Ascension Insurance Services, had formed the jurisdiction’s first portfolio insurance company (PIC) – AGG 1 PIC.
Legislation enabling PICs, comparable to incorporated cell companies (ICCs) in Guernsey, came into effect in January 2015.
“We were up against a tight deadline because the renewals for the members were in February and the legislation was only passed the month before,” Paul Tamburri, west coast risk management practice leader at Ascension Insurance Services, told Captive Review. “We had to get the fronting in place and ensure the carrier understood they were now contracting with the PIC rather than AARIS.”
When AGG 1 PIC was established it originally had 13 members. That has since grown to 15. All members are agriculture businesses with California or Arizona risks writing workers’ compensation.
The rush to find a solution for the original 13 members came about after the owners of a separate Bermuda segregated account company (SAC) changed hands and the clients in two of the three cells wanted to continue working with Ascension.
Tamburri said one of the reasons the SPC option was so attractive to Ascension was they saw the potential to offer a PIC solution to other groups of clients.
“We are already working on a segregated portfolio which we hope to get running by 1 April,” he added. “That cell will be for another group of agricultural clients and is also for workers’ compensation.”
Ascension also works with the trucking industry and education institutions. A large part of its client base is non-profits and the firm is considering setting up another vehicle especially for medical stop-loss.
“The SPC is a big opportunity for our company as a whole, and not just for this one PIC,” Tamburri said.
This article was first published by Captive Review, and written by Richard Cutcher. Captive Review was launched in 1999 and caters for the risk management and captive insurance communities.