1. Create a Superior Dealership Insurance Program
Roger L. Beery, II, President
Austin Consulting Group
Steven P. Gibson, President
Dealer Risk Services

2. Leave this slide blank for video introduction to be added by NADA

3. Create a Superior Dealership Insurance Program
Roger L. Beery, II, President
Austin Consulting Group
Steven P. Gibson, President
Dealer Risk Services

4. The Improving Dealership Insurance Marketplace
The insurance market is always changing. Direct writers are using unrelated carriers for EPLI, DPD, Pollution, and Property.
There is a vigorous market with a couple of new carriers on the horizon
Carriers are still trying to push premiums up, increase deductibles and limit coverage. However, increases are less when insurers feel competition.
A majority of insurance executives think the market will begin to soften over the next months

5. Identify the Insurance Market for Your Dealership
Dealership Insurers are a unique combination of
Direct Writers (Zurich, Sentry, Federated, etc)
Agency/Broker Companies (Travelers, Chubb, etc)
Regional Carriers
Some insurers prefer larger dealership groups while others prefer mid-size and smaller dealerships
Insurers will offer different programs to meet different needs
First dollar or low deductibles
Larger deductibles
Retention programs

6. The Loss and Premium Relationship
Loss experience drives premiums – What do insurers look for?
Historical loss trends
Loss Frequency (Frequency leads to severity)
Loss Severity
Develop Management Response to Losses
Underwriters view loss frequency as a sign of poor management
Effective management response to large or repeat claims demonstrates a desire to control losses

7. Understand Your Claims
Map your claims by line and locations being aware of trends
Auto accidents
Slip and falls
Auto thefts
F&I related claims and allegations
Similar types of worker’s compensation claims
Repeat claimants
Fully document all claims in excess of $10,000
Develop information gathering procedures for claims
Incident Reports
Witness Statements and Pictures

8. Create a Claims Strategy
Quarterly claims reviews
Review loss runs
Consult with Carrier Claims Managers
Review settlement options
Discuss significant reserve changes
Consult with claims Counsel
Initiate risk management strategies for claims control
Safety committees
Safety incentives
Review claim trends
Look for the how’s and why’s of each claim

9. Large Deductible Dilemma
Insurance companies are cash machines. They don’t like to pay you for the risk you take.
What is your risk tolerance if losses turn bad?
Are you reviewing your loss trending when choosing deductibles?
The most economical deductibles in the past may not be the most economical at renewal.

10. Devils in Coverage Details
The basic policy frameworks are similar. The differences are buried deep in complex policy language.
Are repair and replacement percentages the same for wind & hail as they are for other damage?
Is inventory flood excluded?
Is E&O limited to “Defense and Settlement”?
Umbrella Occurrence or Aggregate?

11. Devils in Coverage Details
Employment Practices Liability (EPLI)
Occurrence vs. Claims Made Policies
Lawsuits from non-employees
Wage and Hour claims
Defense inside or outside limit

12. The Truth About Insurance Premiums
Everything is Negotiable
Alternative bids put you in the power position
Without competition insurers will push premiums up
Negotiate the big numbers – not parts
Loss experience drives premiums
Last year’s best deal may not be the best at renewal

13. Six Keys to Effective Bidding
Bid annually to get the right coverage at the best price
Cast a wide net
Direct writers
Agency/broker companies
Specialty insurers
Create your own bid specs so everyone is bidding on the same values

14. Six Keys to Effective Bidding
Get outside the box
Stand-alone coverages
Specialty coverage
Risk financing (deductibles, retentions, etc)
Negotiate…Negotiate…Negotiate
Trust but Verify
Reporting forms
Rating formulas
Unexpected exclusions and higher deductibles

15. Create an Effective Bid Process
Begin your bid process 90 days in advance
Be proactive. If you wait…it’s too late
Communicate with insurers and agents
Meet with Company Underwriters and Claims Managers
Consider your relationship with the insurer a “marriage with an annual trip to the alter”
Review loss runs for accuracy. Explain all losses over $10,000 including the risk management response

16. Create an Effective Bid Process
Assign insurance markets to agents when required
Do not allow one agent to control too much of the process
Be open to deductible and cost reducing options
Loss control representatives can be a key to success

17. Create an Effective Bid Process
Prepare for last minute bids
Allow sales reps to make their presentations
Create an internal spreadsheet for bid analysis (see handout)
Negotiate premiums, deductibles, coverage and limits

18. Professional Bid Specifications
Create a framework for desired coverage, limits and deductibles
Review existing policies as a guide post
Using old policies as bid spec may replicate past mistakes
Provide accurate, concise and consistent underwriting data
Employee lists
Auto inventory values
Building, Contents and Business Interruption values
Contractors who will re-build facility in the event of Loss
CPA’s to assist in determination of Business Interruption needs
See handout for more detail
Manufacturer operating statements are often mandatory
Audited financials may be required for loss sensitive plans

19. Professional Bid Specifications
Include currently valued loss runs (within 90 days of expiration) with large loss explanations
Agents must agree to use your underwriting data or point out all deviations
Time frame expectations should be made clear
State your service expectations, especially with multiple carriers

20. Find Your Risk Tolerance Level
Analyze Historical Claims Trends and apply against Deductible Credits provided by Insurers.
Initiate aggressive Loss Control procedures.
Give Management ‘’skin in the game’’ by making them responsible for Claims Deductibles.
Look for creative ways to fund Property and Liability Deductibles.

21. Umbrella Coverage
Evaluate what you can lose in the event of a really bad claim.
Look for Per Occurrence Limits that are adequate.
Price Umbrella Limits with various carriers…price goes down as coverage layers increase.
Examine what coverages do not extend into the Umbrella and seek excess limits in those areas.

22. Insurance Outside the Box
The Insurance Marketplace is very broad. Just because your agent doesn’t offer a coverage does not mean it does not exist…ask
Unique coverage worth considering
Kidnap and Ransom
Difference in Conditions
Deductible buy-down for weather deductibles
Directors and Officers
Stand alone professional errors and omissions

23. Insurance Outside the Box
Large deductible and retro plans
Captives and Alternative Risk
Group Captives
Cell captives
Single Parent
831b Small captives to enhance your existing program

24. Questions?