It is unfortunate that few Insurance Agents and/or Brokers are aware of the coverage enhancements available in modern Employment Practice Liability Insurance (EPLI) policies for accusations and claims from 3rd party ADA. And even more unfortunate is that many business owners do not know what is available coverage wise and how inexpensive those great enhancements can be.
3rd Party ADA Claims are nothing new in the realm of Employment Practices Liability and are traditionally explained in the following example:
A delivery carrier is delivering a package to the business. Unbeknownst to the business owner, the delivery professional makes an unwanted to unappreciated advance toward one of the employees of the business owner while he/she is signing for the package. This employee can now make a claim of a hostile work environment toward the business owner for the actions of the delivery professional (the 3rd party).
This is the type of example used by 100’s (if not 1,000’s) of agents and/or broker everyday. However what about other 3rd party type claims?
Americans with Disabilities Act (“ADA”) Claims from 3rd Parties
Customers and/or Guests of a business or to a business location can file ADA claims whether they actually become customers of the business or not. These types of claims are typically due to the ADA compliance of the space (building, suite, office, etc.) occupied by the business. These claims can cost a business 10’s of thousands of dollars and countless hours to defend. Then there are the damages and cost to remedy the space – but what if you are a tenant business and NOT the landowner?
Many business owners have heard horror stories where someone was blindsided by an ADA claim and was either devastated or completely put out of business; fortunately there is a preventative measure that can be taken and that is to ensure that your policies contain ALL the necessary bells and whistles.
The Number of Title III Lawsuits Tops 10,000 in 2018
The number of lawsuits filed in California increased by 54% from 2751 in 2017 to 4249 in 2018. This record-breaking California number does not even include the many state court filings.
According to ADA Title III, the number of ADA Title III lawsuits filed in federal court in 2018 hit a record high of 10,163 – up 34% from 2017 when the number was a mere 7,663. This is by far the highest number of annual filings since we started tracking these numbers in 2013, when the number of federal filings was only 2,722. In other words, the number of cases has more than tripled. The chart below shows the explosion in these types of suits
What is Causing the Drastic Increase in ADA Lawsuits?
There were close to 5,000 ADA lawsuits filed in federal court for alleged website violations in the first six months of 2018. According to an analysis by Seyfarth Shaw, a law firm that specializes in defending such cases. The firm predicted that the number of lawsuits will climb approximately 30% from 2017 to nearly 10,000 by the end of the year.
With online sales, reservations and job postings now a huge part of technology, advocates for the disabled say websites need to be as accessible to everyone, just as brick-and-mortar stores, restaurants and schools are.
Coverage IS Available for 3rd Party ADA Claims
The precaution to protect against 3rd Party ADA claims is already available to most business owners, but is sadly not offered by their Agent and/or Broker. Many EPLI policies can actually be endorsed to provide coverage for the business owner for these exact types of cases. As one would expect, the coverage provides for Defense Cost and Damages; however does not cover the remediation needed to bring a subject space up to compliance. Even with this, the cost of the coverage is typically minimal as compared to the cost of not protecting one’s business.
If you’d like to get a quote or are unsure if your current policy covers 3rd Party ADA claims, please visit our EPLI page.
California’s Leader in Insurance and Risk Management
As one of the fastest growing agencies in California, GDI Insurance Agency, Inc. is able to provide its clients with the latest and greatest of what the insurance industry has to offer and much, much more.
We are headquartered in Turlock, CA, with locations across the heart of California’s Central Valley, Northern California and beyond to provide a local feel to the solutions and services we provide our clients. We pride ourselves on exceeding our client’s expectations in every interaction to make sure that our client’s know how much we value and appreciate their business. Contact us today 1-209-634-2929 for your comprehensive EPLI insurance quote!
Matthew Davis, MBA, CPCU, AAI
Coverage can also be provided on a standalone basis for Property Owners, Landlords, Property Managers, and Real Estate Professionals – Ask us how we can help with those as well.
The insurance industry is one of the greatest industries. In what other industry can anyone – and I mean ANYONE – have the opportunity to make as much income as they want and where the only limiting factor is one’s own effort?
Being still relatively young in the insurance industry and quite young for having as many years under my belt as I do, I often get questions and comments like:
“Why in the world did you chose a job in insurance?”
“You must have a family member in the business.”
“Insurance is so boring, how can you stand it?”
I do have a family member who was already in the business – my father, so that statement is true. However I totally disagree with the idea that insurance is a boring profession. I find the work challenging, the people I work with are amazing, and the competition in the marketplace is exciting and invigorating. But the main reason I chose CAREER – not just a job – in insurance was because of the opportunity for personal and financial growth, a sense of fulfillment from being able to SERVE clients, and of course the ability to continually increase my income with no virtually ceiling.
There is really only one reason why anyone in insurance production fails is because they are not walking, talking, living and breathing as an ENTREPRENEUR! I have a friend that owns an extremely successful agency with locations across multiple states and he simply refuses to hire anyone into a production role who is not an Entrepreneur. Individuals who are Entrepreneurial at heart are those that do not begrudgingly trod to work when the going gets busy or challenging, but rather spring in to office with a bounce in their step eagerly awaiting the opportunity tackle the challenges of the day. The entrepreneur does not simply clock in at 8am and clock out at 5pm, but rather they are always thinking of their business – or book of business – and how they can improve and maximize its potential. This is the beauty of the insurance industry – you CAN continually improve upon your book of business and continually reap the benefits of those improvements. What else could be better?
Many, many insurance agents/brokers are living proof that the insurance industry is one of the greatest businesses to be in if you are looking to work hard for “X” period of time to then live the lifestyle you want for the rest of your life. Many captive carriers use this as the carrot on the end of the stick that they dangle in front of new and prospective agents. My biggest word of advice to such new and prospective agents is to look at the entire landscape of the industry and see where you would fit best – for most it would be in the Independent Agency model if they can gain entry to it.
We in the retail insurance agency/brokerage segment of our industry are required to enter in to contractual relationships with many parties – insurance companies, wholesalers, employees, vendors, and with our clients. Many times we as agency principals do not appreciate or give adequate consideration to the expectations in our insurance company relationships.
Very few agents will say that they do not pay attention to their clients and companies, but in practice they either partially or completely neglect them on a regular basis.
Like in Any Relationship, Both Parties Must Be Fed and Nurtured
Take a romantic relationship for example, successful relationships are where both parties are “giving” in their interactions with the other and are concerned about the other. Everyone has been in a “bad” romantic relationship or one that was not great and a common denominator in many such cases is a lack of attention given to or fulfilling of the needs of the other.
The Give and Take of Insurance Company Relationships
When we enter into insurance company relationships we take upon ourselves commitments that we agree to deliver to insurance company. Many times these are commitments of Premium and Policy volume, Policy and Premium Retention, Adequate servicing of an assigned book of business, thorough field underwriting, etc.
If asked whether or not they are meeting their insurance company commitments, nearly all agency principals would answer yes, but in fact are not. Are we providing exceptional service to our clients and relaying MEANINGFUL feedback to the insurance company that can then be utilized by the carrier to improve?
I’ve been in many meetings with other insurance agency owners where the meeting becomes a whining session where each is complaining that “XYZ” insurance company is not providing them with what they need, to which I like to respond with the following question… “What have YOU provided the carrier that makes you better than the next agent in their files?”
Production, profitably, and retention are always cited in response, but that is the same response that everyone else has as well. You cannot stand out from the crowd by being the same as everyone in the crowd.
I happen to be blessed with mutually beneficial insurance company relationships with most of my agency’s insurance company partners (and yes, we think of them as partners and NOT adversaries). Each carrier and its personnel have a wide breadth of knowledge and opinions that I’ve found to be very valuable. I recently discussed workers compensation strategy with a carrier representative from an insurance company that does not write workers compensation. The advice was spot on and ended up being extremely valuable as the marketing rep had been a retail agent/broker specializing in middle-market construction for nearly 10 years prior to making the transition to the corporate side. If I had treated him/her as a typical agency owner treats their insurance company representative I would have never had discovered his/her background and been able to benefit from it.
Don’t Over Promise…
Business relationships in general work best when the parties do NOT fail to meet their commitments – surprise, surprise. I like the saying, “under promise and over deliver” because if you follow it and do err you err on the side of beating your objective and not missing it.
In the age of consolidations and automation in the insurance industry if we as agency owners cannot maintain growth and profitability for our insurance company partners we will not be partners much longer.
I know of an insurance company with a strong household name that is currently terminating longstanding agency contracts left and right for agents with profitable books of over $1M in premium due to their failure to maintain acceptable growth. I feel for those agency owners on one hand but on the other they did sign on to growth commitments and they failed to perform. My advice here is to never sign an annual production commitment agreement with a carrier without first knowing the terms of recourse the carrier will follow at the end of the period.
One thing to note is that insurance agencies are the outsourced sales and frontline customer service organizations for our insurance company partners so growth year-over-year will be expected.
Ask For Advice…
I make a habit of not ending ANY meetings or phone calls with our insurance company partners without asking for what they think we are doing well, what they see we are struggling with, and where they think we should put focus more of our effort and attention. I know that in a “sales” mindset one does not want to shine a light on their weaknesses, but in an honest relationship one MUST; so I make it a habit of asking for criticism as often as possible.
Relationships Usually Come to an End…
Ultimately when you enter in to insurance company relationships with a carrier, vendor, etc. it is similar to entering in to a romantic relationship. Your way of interacting changes at the onset of the relationship and once it terminates it is always a little awkward and rarely is does it end without resentment from at least one of the parties if not all.
Unfortunately many relationships have a limited lifespan and do come to an end (in business, romance, and friendship). The best way to keep from having any hard feelings is to have open and honest communication as much as possible. It is always fair to respectfully share your pleasure and displeasure with any party in a relationship – the key word here is RESPECTFULLY! I know many agency owners that chose to yell and/or swear at their insurance company representatives and think that is how business is done. It ends up being a shame for them and a blessing for those of us that value relationships as we then don’t.
We’ve found that the majority of these insurance customers with Audit Issues are located in and around the Turlock, CA area (many of which most are businesses most local residents would recognize).
Nearly all the clients were told something along the lines of, “…the audit is what it is and there’s not much that can be done about it”, or some variation thereof.
More often than not, that type of statement is FALSE!
In nearly every instance we’ve recently come across, there have been actions that were able to be taken in order to correct inaccurate audits. If an employer’s payroll at the end of a policy year is materially greater than he/she estimated at the beginning of the policy, then an audit should be anticipated (in many, BUT NOT ALL cases).
I’ve had two cases come across my desk recently that were so incorrect that if the clients would not have come to GDI Insurance for help that they may have jeopardized their own solvency. I now feel compelled to share one of their stories.
STORY 1 – Firm Located in Turlock, CA
The firm was once a client of GDI Insurance Agency up until 2005 when they decided to utilize another broker who offered them a slight premium savings. In 2010 GDI was asked to take a look at the Workers Compensation policy as they were being given an invoice for an additional 125%+ of their quoted premium as their Audit. Their original policy was quoted right at $65,000 for the year and at the end of that year their audit from the insurance company demanded an additional $85,000.
We agreed to look into the audit and discovered that the prior agent/broker had done nothing wrong, BUT… at the same time did not take the couple of tiny steps that would have aided their client. We stepped in an discovered that the root of the audit was due to a miscommunication between the independent auditor for the company and the client’s staff revolving around operations the auditor assumed the client was performing, but in actuality never performed (or ever plans to perform).
In the end the client had higher payroll and did have to pay an amount at the end of the audit of only $4,000. The audit was decreased by 95% by our office simply looking at the material and bringing up a few points of discussion with the auditor.
Why didn’t the prior agent/broker offer to help???
It is relatively known to many insurance customers that ALL premiums paid are commissionable their agent, and in California agents can make as much as 10-12% or more commission on workers compensation policies. So the prior agent had no incentive to offer to assist the client to correct the audit as they were hoping to receive an additional $8,500+ on the policy for simply letting the audit stand incorrect.
So what are The Good, The Bad and The Ugly of workers compensation audits?
THE UGLY – Are those audits that have been paid based on incorrect information or lack of explanation to the client.
THE BAD – Are those audits that are not yet paid, but are billed based on inaccurate data.
THE GOOD – Are those audits that go by without a hitch and are understood by the customer.
If you believe you are the subject of a bad insurance audit, either for workers compensation or any other type of policy, Talk To The Experts and GDI Insurance Agency, Inc. in Turlock by calling 1-209-634-2929 or visiting us online at www.gdiinsurance.com.
Agency performance reporting – What carriers look for & how they evaluate your agency
Insurance companies evaluate the insurance agencies they contract with in a very similar fashion to how agency owners evaluate their sales personnel – with reports and/or scorecards.
Similar to how insurance agency owners should focus on the numbers that are key indicators of performance, so do insurance companies. Many times insurance companies boil down their figures to a lowest common denominator to simplify their strategy so both their marketing personnel and the agency force as a whole can understand it. And more often than not this over simplification leads to a failure on both ends – failure of the insurance company to effectively communicate it’s intent and a failure of the agency force to understand and in turn deliver what the insurance company truly wants.
Common Metrics and Targets…
Premium Growth
Policies in Force (“PIF”) Growth
Policies in Force (“PIF”) Retention
Premium Retention
Profitability
Utilization of Automation
Growth and Retention Goals
Growth and Retention goals are some of the most common and appear very simple to understand, but can still have some complexity in them. Many times the goal of an insurance company for an agency is “Net Growth” and not straight new business production. Net Growth includes both new production and attrition (lost production, or lost business). You may very well have a banner year when it comes to new business production, but if you’re agency is losing clients out the back door nearly as quickly as you’re acquiring new ones, then are you really getting ahead?
I’ve had one carrier representative come in to our office over the past 3-4 years and have his/her guidance and suggestions for what our agency should focus on shift with the ever-changing wind. Due to this our team kept shifting strategy when it came to trying to meet our commitments with this carrier until we realized what the actual target was – equal parts Net Growth and continued incremental reduction in Loss Ratio.
The importance of metrics is a universal NEED in our industry, however the importance of one metric relative to another can differ just as many times as the number of people you ask.
In the end, if you don’t know your numbers then you can’t evaluate the numbers of your carrier partners to ensure that you and your organization are evaluated fairly. It is my recommendation that you keep your figures available and your commitments in writing so that you can pull them out whenever you or a carrier partner has a question.
We use cookies to optimize our website and our service.
Functional cookies
Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes.The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
