Group Insurance. South Bay Risk Management. Alan Virgil. DWEA Group Insurance Webinar May 9 th, 2012

Transcription

1 Group Insurance Alan Virgil South Bay Risk Management DWEA Group Insurance Webinar May 9 th, 2012

2 Casualty-Property Group Insurance Program Goal: To build a sizeable premium base within the renewable energy industries to establish a group insurance program for its member participants.

3 Included Coverages Coverages included within the group program include automobile, equipment floaters, general liability, installation floaters, professional liability, property and workers compensation insurance.

4 Other Coverages Coverages that we can provide but don t include within the group program include: Bonding Directors & Officers Liability Employment Practices Liability Fiduciary Liability International Packages Medical / Health Insurance

5 Four Options The Group Insurance Marketing Program can be provided by four options. They are: Risk Retention Group Captive Insurance Company On your own to place your own policy. Industry Program developed with interested carriers.

6 Options #1 and #2 Options #1 and #2 are long range options for DWEA at this time because the minimum annual (combined) premium for all participants must be at least $1,000,000

7 Options #1 and #2 Furthermore, there are significant administrative, legal and start-up fees to establish a group insurance plan under one of these programs. At this time, DWEA doesn t begin to qualify or have the financial resources to establish one of these group insurance programs.

8 DWEA Property Casualty Insurance Program Advantages & Disadvantages Considerations

9 Advantages & Disadvantages Advantages: Favorable loss experience by everyone can impact the entire group in a good way. Disadvantages: Poor loss experience from one or a few could negatively impact the entire group program.

10 DWEA Property Casualty Insurance Program Barometer Status Report Currently, SBRM written premium for small wind installers is $56,855

11 How the Group Premium-levels are Reached It s a combination of the number of companies participating and the annualized premium size of the group. Each company is underwritten on it s own merits Each company would have it s own policy for each line of coverage. Current combined loss experience is very favorable.

12 What We Need What is needed are more members participating to help reach that $1,000,000 premium goal for a specific insurance program for DWEA.

13 DWEA Property Casualty Insurance Program

14 Centralized DWEA establishes one common effective date for all member participants. DWEA processes all billings for all member participants and is responsible for collection and remittance of all premium payments. DWEA controls the marketing of the insurance program including all current and future group insurance master insurance programs for it s members.

15 Centralized DWEA receives any dividends generated by the members that participate in the group insurance program. DWEA could / may charge a small administrative fee to each participating member to be a part of the group insurance program.

16 Decentralized Each member participating in the group will have it s own individual policy for each line of coverage. Combined results of all participating companies affects future pricing for everyone involved.

17 Decentralized Designated insurance broker reports to DWEA periodically with premium and loss results for the combined group and strategizes for future insurance marketing of the group. DWEA is free to endorse SBRM or any other insurance broker to market the combined insurance needs of it s members.

18 DWEA Casualty-Property Insurance Program Next Steps

19 Next Steps Continue growing the size of the collective group by adding in members. Provide historical information to SBRM for review and insurance proposal option.

20 Group Insurance Example North American Steel Alliance (NASA)

21 North American Steel Alliance Example of a real life group insurance program developed through Fireman s Fund Insurance Company for Steel Service Centers. This was a homogenous group of companies within an industry that came together and developed a master insurance program. The group program provided advantageous insurance products and services to it s participating member companies.

22 North American Steel Alliance The group was built from zero to over $3,000,000 annualized premium with two years and continues to be a viable insurance option to all of it s members.

23 North American Steel Alliance The Group Insurance Program established with Firemans Fund Insurance Company offered a 6% dividend to profitable members of the group program. Participating companies benefited by receiving preferred rates and broadened coverages, plus the profit sharing dividend from the insurance company.

24 Questions & Answers

25 Small Wind Turbine Installer Insurance Questionnaire Describe Your Operations: a.) Geographic Area of Operations: Please list the activities in which you engage: Electrical License Number Solar License Number General Contractor License Number Wind Energy Installer License Number Other? License Number Please break down the percentage of residential vs. commercial work: a.) Residential % b.) Commercial % _ Describe your experience as an Installer? Accreditation / Training / Experience? Number of Years Experience? Have you completed any additional Training, Safety Instruction, Certification or Continuing Education? List the companies for which you have completed training to be an authorized Installer. Please attached copies of certification. Do employees that install & service for you have the same training or c ertification? Do you provide any training for your employees? Do you hold regular safety meetings with your employees? How Often? Do you Sub-Contract any work? What? Annual cost? Do you obtain Insurance Certificates from them? What minimum limits do you require your subs to carry? What is the maximum height that you operate? Do you use any cranes or other special lifting devices? Claim History (5 Years)? Any claim incidents? Please request Currently Valued Loss Runs from your current and any prior I nsurance agents to cover the five year period. Do you have any special Contractual Obligations for any of your customers?

26 Estimated Annual Gross Receipts for the next 12 months? Estimated Annual Payroll for the next 12 months? Automobile Insurance required? 1)Driver details: Name, DL# and date of birth 2)List of vehicles to be insured with full vehicle identification numbers 1)Automobile Claims? _ Installation Floater / Builders Risk insurance requirements? 1)Maximum Limit per installation? 2) Average Limit per installation? 3) Estimated number of annual installations? Portable Equipment Floater 1)Aggregate value of all portable tools & equipment? 2)Maximum value any one item? 3)Portable Computer Hardware & Software? Workers Compensation 1)Estimated annual payroll for field personnel? 2)Estimated annual payroll for office personnel? 3)Estimated annual payroll for others? 4)Federal Employer ID # (FEIN) 5)Number of employees per class? 6)Do you have a safety program? 7)Details: Surety Bond needs 1)Bid & Performance Bonds? 2)License Bonds? 3)Other? Contact Information: 1)Phone: 2) address: 3)Address: Submit to: Alan Virgil at South Bay Risk Management 1)Phone: Fax: ) avirgil@sbrmins.com

27 Distributed Wind Energy Association Insurance Programs for Installers South Bay Risk Management & Insurance Services provides a full range of products and services for the renewable energy industries. Our primary focus is on five major areas within the green energy companies. They include: Developers and Owners of the Renewable Energy Systems Consultants Manufacturers Wholesale Distributors Installers & Service / Maintenance Contractors General Liability Coverage Enhancements include: Blanket Additional Insured Endorsement Waiver of Subrogation Endorsement Primary / Non-Contributory Endorsement Contractors Pollution Liability coverage included Professional Liability coverage included Flat / Non-Auditable Premium Basis

28 Commercial Insurance Products Automobile Bonding Builder s Risk Cargo / Transportation Insurance Credit Insurance Crime Insurance Directors & Officers Liability Employment Practices Liability Equipment Floaters General Liability Installation Floater International Packages Kidnap & Ransom / Extortion Performance Guarantee Professional Liability Products Liability Completed Operations Liability Mechanical Breakdown Warranty Insurance Workers Compensation

29 Carriers ACE Berkshire-Hathaway Chartis CIC programs CNA Energi Evanston Everest National Export / Import Firemans Fund G-Cube programs Hanover Hartford Great American NCCI OneBeacon State Compensation Insurance Fund Seneca Travelers Westchester

30 Medical Expenses: Pays medical expenses resulting from bodily injury caused by an accident on premises owned or rented by the insured, or caused by the insured s operations. These payments are made without regard to the liability of the insured. Often referred to as good will insurance. Products Liability: The liability for bodily injury or property damage incurred by a merchant or manufacturer as a consequence of some defect in the product sold or manufactured. Completed Operations: Completed Operations Liability insurance is a very important component part of an installer s insurance program. Completed Operations coverage responds to bodily injury and / or property damage losses that might occur after the completion of the installation and resulting in the negligence of the work performed. This important coverage does not cover faulty work. Deductible: A portion of covered loss that is not paid by the insurer. A per occurrence provision that stipulates that the deductible amount specified in the policy declarations will be subtracted from each covered loss in determining the amount of the insured s loss recovery. Source:

31 Commonly Requested Endorsements Additional Insured A person or organization not automatically included as an insured under an insurance policy, but for whom insured status is arranged, usually by endorsement. A named insured s impetus for providing additional insured status to others may be a desire to protect the other party because of a close relationship with that part (e.g., employees or members of an insured club) or to comply with a contractual agreement requiring the named insured to do so (e.g., customers or owners of property leased by the named insured). Vendors Coverage Additional insured coverage, usually under a manufacturer s general liability policy, for specified vendors with respect to their distribution or sale of the manufacturer s products designated in the schedule on the endorsement. This endorsement gives products liability coverage to the vendors distributing or selling the named insured s product and eliminates the need for the vendor to purchase separate products liability coverage. An example would be if you sell a particular manufacturer s product to your customers. You would then need to have that manufacturer extend their Products Liability coverage by way of the Vendors Endorsement and name your company as Additional Insured. Source:

32 Primary and Non-Contributory Primary and Non-Contributory wording means that your General Liability policy will pay first in the event of a claim. The Non-Contributory part means that not only will your policy pay first, but it will pay the full amount of the claim until the limits are exhausted without your client contributing to the loss with the own insurance. Not all General Liability policies have this coverage built in and it can be quite expensive to purchase if your was issued without it. Waiver of Subrogation The relinquishment by an insurer of the right to collect from another party for damages paid on behalf of the insured. The Waiver of Subrogation condition in current standard policies is referred to as transfer of rights of recovery. Source: and

33 Additional Liability Coverages Employment Practices Liability Liability insurance covering wrongful acts arising from the employment process. Frequent types of claims include wrongful termination, discrimination and sexual harassment. This coverage is not automatically included under the standard general liability insurance policy so must be purchased separately. Coverage is typically written on a Claims-Made basis. Directors & Officer Liability Coverage applies to three main categories. They are: Side A Coverage: Directors and Officers as a Group Side B Coverage: The Directors and Officers as Individuals Side C Coverage: The Corporate Entity Professional Liability This coverage protects the contractor from design errors or omissions. Professional Liability also covers allegations coming from third parties and could result in significant legal defense costs. The all important question to determine is whether your policy includes defense coverage within or outside the limit. Within the Limit means that all defense costs will erode the aggregate limit. Outside the Limit means that defense costs will NOT erode the aggregate limit.

34 Workers Compensation There are two main coverage parts to a standard workers compensation insurance policy. They are: Coverage A Workers Compensation Coverage B Employers Liability Note: If you are domiciled in a Monopolistic State ( North Dakota, West Virginia, Washington, Ohio you can only secure workers compensation insurance through your respective state workers compensation insurance fund. If this applies to you, you therefore need to have your general liability insurance carrier provide a Stop Gap Liability insurance Endorsement to your general liability insurance policy. Stop Gap Liability picks up coverage for Coverage B (Employers Liability) and applies in those Monopolistic states where a standard workers compensation insurance policy cannot be obtained. Experience Modification Factors Experience Modification Factors are developed by measuring the difference between the insured s actual past experience and the expected or actual experience of the class. This factor may be either a debit or credit and, there, will increase or decrease the standard premium in response to past loss experience. When applied to the manual premium, the experience modification produces a premium that is more representative of the actual loss experience of an insured. An employer with average experience has a modifier of 1.0 and would pay the manual premium. Employers with poorer loss experience will have modifiers greater than 1,0 and would pay more than manual premium. Those with good experience would have modifiers below 1.0 and pay less than manual premium. Source:

35 Property Insurance Insures against damage to buildings and contents from covered perils which are typically all risk but certain defined exclusions such as earthquake and flood especially apply. The policy may also cover loss of income of the increase of expenses resulting from the insured claim. Renewable Energy Property Coverage Extensions can include: Advance Loss of Profits Delay in start up Production Tax Credits Mechanical Breakdown Installation Floater / Builder s Risk Floater A property insurance policy that is designated to cover property in the course of construction. Coverage is usually written on an all risk basis and typically applies not only to property at the construction site, but also to property at off-site storage locations and in transit. The estimated completed value of the project is used as the limit of insurance. Equipment Floater Covers scheduled and miscellaneous tools and equipment that operates in the field beyond the scheduled location. Source:

36 International Package Insurance Coverages Include: Automobile General Liability Property Kidnap & Ransom Workers Compensation Bonding A Surety Bond is a three party contract. The parties are: First Party: The Surety Bond Company Second Party: The Obligor (Principal) that is securing the bond. Third Party: The Obligee Typical bonds include: License & Permit Bonds Bid Bonds Performance Bonds Payment Bonds

37 South Bay Risk Management Advantages Industry Specialization Broadened Coverages Competitive Rates Multi-State & International Capabilities Customized Insurance Programs for Specific Needs Prompt & Efficient Certificate Delivery Systems Contract Review & Analysis of Insurance Requirements Alternative Funding / Marketing Expertise Experienced & Professional Staff of Professionals

38 The End of the Presentation Thank you for your participation