July 2022 - Competitive Edge Insurance

The Coverage Pitfalls of Insurtech

in General Business Insurance, News, Video

With the rise of technology comes the rise of a new sector disrupting the insurance industry: Enter insurtech.

But what is insurtech, and what are its coverage pitfalls? Here, we have Brenda Jo Robyn, founder of Competitive Edge Insurance, on video to discuss the coverage pitfalls of insurtech.

What is Insurtech?

First, what is insurtech? Insurtech is a combination of the words “insurance” and “technology,” and refers to “technological innovations that are created and implemented to improve the efficiency of the insurance industry,” according to TIBCO.

Research shows that the insurtech industry is expected to reach a market size of $114 billion by 2030. This doesn’t come as a surprise considering that this tech helps large insurance companies explore new insurance options without the need for human efforts. Using information gathered from observed behavior, TIBCO says this could include:

“Dynamically-priced insurance policies
Small business insurance, and
Social insurance options

Insurtech also provides insurance companies access to data streams from IoT devices.”

An internet of things (IoT) device is a physical object “with sensors, processing ability, software, and other technologies that connect and exchange data with other devices and systems over the Internet or other communications networks.”

Read on for more information on IoT devices.

The Pitfalls of Insurtech

Insurtech’s technological innovations can scour the internet, pulling information from a host of websites to make an informed insurance assessment.

While technology can sometimes work smarter than traditional insurance methods of insuring a business, insurtech also has its pitfalls.

Insurtech and Underinsurance

When it comes to evaluating and preparing property insurance, insurtech might be able to provide you with information including:

When the building was constructed
Permitting information
When there were last upgrades or renovations completed

Insurtech, however, cannot give you the details of what is inside a specific building. It will not be able to tell you information regarding:

The tenancy inside a building
Rooms of high value inside of a building that might require additional coverage (i.e. computer rooms)

So, because of this lack of information, you have a lot of very underinsured individuals when it comes to using insurtech.

Insurtech and Human Touch

As it’s been made clear, you do not receive the same human touch when you opt for insurtech.

At Competitive Edge Insurance, we believe it is helpful to have a professional as your advocate to take a look and give you options—not a technological innovation!

The most important thing that you receive with that human connection, according to Brenda Jo, is that this professional can share that an individual has options.

They can:

Cover their property at certain limitations, or
Decide to self-insure

A traditional insurance professional can help determine what self-insurance might look like. For example, what will they be insuring? Is the self-insuring simply increasing the deductible or not having that type of coverage altogether?

Our team at Competitive Edge can help take a look at your unique circumstances to help determine your areas of risk, where you’re covered, where you’re underinsured, and how to amend these pitfalls.

Interested in learning more? Read on in our article “How Does a Building Owner Know if They Are Underinsured?”

Understanding D&O Insurance: What You Need to Know

in General Business Insurance, News

While the term ” D&O insurance” may seem like just another one of the many acronyms floating around the insurance world, this form of liability insurance is essential in protecting corporate directors and officers.

Let’s chat about directors and officers liability insurance, also known as D&O insurance. We’ll break down what it covers, who needs it, and why all corporate directors and officers should be familiar with this little acronym.

What is D&O Insurance?

Directors and Officers (D&O) liability insurance is insurance coverage that helps protect “the personal assets of corporate directors and officers, and their spouses, in the event they are personally sued… for actual or alleged wrongful acts in managing a company.”

The parties suing a director and/or officer could include:

Employees
Vendors
Competitors
Investors
Customers, or
Other parties

What Does D&O Insurance Cover?

Typically, D&O insurance helps not only protect your business but also helps pay for lawsuit-associated losses (i.e. legal fees, settlements, etc.) when the insured is found liable.

There are, however, three types of insuring agreements—titled Side A, Side B, and Side C—in a typical D&O policy. Read on for more on the different types of directors and officers liability insurance.

What Does D&O Insurance Not Cover?

While “breaches of fiduciary duty, failure to comply with regulations, lack of corporate governance, creditor claims, and reporting errors” are typically covered by D&O insurance, according to Investopedia, D&O insurance does NOT cover the following:

Outright fraud
Illegal profits
Criminal activity, and
Lawsuits between managers within the same company

Who Needs D&O Insurance?

So, when do D&O claims pop up? Most often, directors are officers are sued for:

“Breach of fiduciary duty resulting in financial losses or bankruptcy
Misrepresentation of company assets
Misuse of company funds
Fraud
Failure to comply with workplace laws
Theft of intellectual property and poaching of competitor’s customers
Lack of corporate governance”

This considered, you might be wondering: “Does my business need D&O insurance coverage?” The answer might be yes—depending on the size and nature of your business.

Any business that has a board of directors or similar corporate or advisory committee—whether you’re private, public, or even a nonprofit—should consider investing in D&O insurance.

Why? Claims against businesses and their directors are increasing. Plus, if you work with vendors or government entities or even just have employees or customers, you are prone to exposure that could make your organization vulnerable to costly D&O claims.

Interested in learning more about what insurance you need as a business owner? Read on in “how does a building owner know if they are underinsured?”

Why You Need to Audit Your Commercial Property Insurance

in General Business Insurance, News, Video

Commercial property insurance is a necessity for commercial buildings and business owners. Why? Commercial property insurance helps protect a business’s physical assets from unforeseen events. Some examples of these events include:

Fire
Explosions
Theft
Vandalism
Storms

According to Nationwide, additional coverage is often also available for floods, earthquakes, equipment breakdown, and other causes of loss to your business.

Here, we have Brenda Jo Robyn, founder of Competitive Edge Insurance, sharing a story of a client who did not have the proper commercial property insurance, and why you need to audit your commercial property insurance to avoid a similar experience.

What Can Happen if I Don’t Have Adequate Commercial Property Insurance?

“We had a client who had a sewer backup in a four-story concrete building. On the second floor, the bathrooms backed up, causing severe flooding into the first floor—which happened to be a restaurant.

This flooding damaged all of the restaurant equipment. The claim ended up being just under $400,000.”

The worst part?

They didn’t have the necessary coverage. This particular client, in fact, only had about $50,000 worth of sewer backup coverage.

Auditing Your Commercial Property Insurance

This example considered, it’s extremely important to periodically audit your commercial property insurance.

This particular example actually encouraged our team to take a look at additional insurance areas that might be lacking. It became an opportunity.

For example, this same client had executive suites full of costly desks and computers—but no business personal property.

Hypothetically, if the sewer backup had flooded onto that executive suite floor, what would have happened? Remember, insurance audits are all about thinking ahead and considering the ‘what ifs?’

“So, our team at Competitive Edge went around and took a look at everything. We looked at the HVAC system; the client didn’t have enough insurance for that system to be replaced if something happened. Moreover, this client provided computer services to its clients and had server rooms next to the elevators. These rooms also weren’t covered.

During our insurance audit, we went in and did a full assessment of both:

The structure of the building
What was inside the building and what the client was responsible for

Interested in learning more about commercial property insurance? Read on in our article “Property Owners: What Commercial Insurance Do You Need?” for five types to consider.

Workers’ Compensation and EPLI Claims Are Rising: What Does This Mean?

in News

Workers’ compensation and employment practices liability insurance (EPLI) claims are increasing across the board. Why is this happening? And what does it mean for businesses?

Let’s discuss.

Workers’ Compensation and EPLI: Defined

Briefly, before diving in, we want to make sure that readers are familiar with both workers’ compensation and EPLI. Below is an abbreviated definition of each.

Workers’ Compensation Insurance

Workers’ compensation is insurance, paid by an employer. This coverage provides wage replacement and medical benefits to employees who are injured during while working for the insured.

Wages and benefits are provided in exchange for eliminating the employee’s right to file a lawsuit against their employer’s negligence, and can help pay for:

Lost wages
Medical expenses
Rehabilitation costs
And more

Read on to understand the basics of workers’ compensation.

Employment Practices Liability Insurance

Employment practices liability insurance (EPLI) “provides coverage to employers against claims made by employees.” Policies typically extend coverage to the following:

Wrongful Termination
Sexual Harassment
Wage-Related Claims
Claims of Unequal or Unfair Pay
Discrimination Claims (i.e. age, race, gender, sexual orientation)
Third-Party Claims

For more information, read our EPLI article.

A Background on Workers’ Compensation and EPLI Claims

Over the past two years, the number of both workers’ compensation and EPLI claims have increased. In fact, research from the Equal Employment Opportunity Commission (EEOC) shows that EPLI claims have increased annually since 2003, with 37,632 workplace retaliation claims filed in 2020.

Moreover, as individuals have begun to return to work in person, the number of claims regarding health and safety in the workplace have increased as well. These claims typically include:

Employee concerns about exposure to COVID-19 due to unsafe working conditions, or
Situations where employees allege they were wrongfully denied a request for a workplace accommodation or leave

What Can You Do as a Business Owner?

So, with this rise in claims, what can you do to protect yourself as a business owner? You can prevent workers’ comp and EPLI claims by:

Developing and Distributing an Employee Handbook
Developing and Distributing a Code of Ethics Policy
Implementing a Handbook Auditing Procedure
Prioritizing risk mitigation

Interested in learning more about risk mitigation? Read on in our article “Risk Mitigation: What Is It and How Can You Do It?”