Category: Commercial Insurance

American Advantage Insurance named 2015 ‘GEM’ Agency

Chris 1 Comment

American Advantage Insurance is thrilled to announce that we have been named a 2015 ‘GEM’ Agency by IMT Insurance Company for the 2nd year in a row!   American Advantage Insurance has been recognized as one of the highest performing agencies in its six state territory (Iowa, Illinois, Minnesota, Nebraska, South Dakota, and Wisconsin).  Of the approximately 900 IMT Group agencies eligible for consideration, only 63 (7%) of the top performing agencies received the GEM distinction this year.  The IMT Group awards the GEM distinction to only those agencies that demonstrate outstanding performance in the areas of rank, growth, loss ratio, and profitability.

The IMT Group is a leading provider of personal and commercial insurance products and is headquartered out of Des Moines, IA.  American Advantage Insurance is proud of its partnership with IMT Insurance Company and looks forward to continued growth and profitability.  Congrats to all other GEM agencies!

Uber: “Criminal Enterprise” or Innovative Leader?

Chris

Uber Technologies Inc., a popular app-based transportation network, is quickly becoming one of the most controversial businesses of this decade.  Among millennials, Uber is a popular transportation mode – easier, quicker, and cheaper to use than normal taxis.  However, traditional taxi drivers, taxi cab companies, state insurance agencies and law enforcement officials are taking Uber to task.  Recently, a Philadelphia cab company called Uber a “criminal enterprise” in a lawsuit seeking to block the on-demand car service from operating in the city.

Is this a case of a traditional modeled business lashing against an innovative, disrupting company – or is there any legitimacy to the cab companies claim?

uber blog

After raising $1.2 billion last month, Uber is currently valued at $40 billion (which, hypothetically, makes it more valuable than Delta Airlines, CBS, and General Mills).  At that kind of valuation, the company will be the target of much scrutiny.  In the case in Philadelphia, cab companies are arguing that only taxis that have a certificate of public convenience and a medallion valued at $520,000 are allowed to operate in the city – which Uber does not comply with.  In other cities, there have been other disputes about insurance requirements and whether or not Uber carries adequate insurance protection.

Is this a smear campaign or are these legitimate concerns?  One thing is clear:  nothing is clear when an innovative company leveraged with investor’s capital disrupts an industry and operates prior to getting approval from regulatory agencies.  I do not know who is in the right or wrong nor whether Uber is a ‘criminal enterprise’.  We’ve written extensively about the insurance implications with ride-sharing companies previously (read here).  Regardless of how this plays out, it’ll be a fun ride.

Cyber Liability Seen as Top Emerging Risk for 2015

Chris

The Insurance Journal posted an article yesterday regarding the top risks for 2015.  The survey was completed by top insurance and reinsurance executives.  According to 40% of respondents, cyber liability is the most threatening emerging risk.  Terrorism came in second, with 31% of the respondents identifying it as a top emerging risk (climate change was 3rd).

cyber liability

“Cyber attacks are one of the most serious economic and national security challenges facing not only the insurance industry, but governments and businesses around the world,” said Andrew Marcell, managing director and chief executive officer of U.S. operations at Guy Carpenter.

In this interconnected world, cyber liability is probably the least understood and most underinsured risk a business faces.  As witnessed first hand by major international retailers (see Target, Home Depot) – the risks are present no matter the size of your business.  Furthermore, protection against cyber liability threats continues to prove more difficult as threats become more sophisticated.

Inc. Magazine posted an article (read here) that points out 5 reasons you should have cyber liability insurance:

1.  It’s more affordable thank you think.

2.  It can cover more than you think (most policies offer ‘first party’ coverage – which covers business interruption and the cost of notifying customers of a breach).

3.  You probably don’t have a risk management team.

4.  Even if you don’t host your data yourself, you’re still responsible.

5.  Your general (liability) policy won’t cover you.

Most times, especially for small businesses, the expenses created by a data breach can be enough to put a company out of business.  These costs can include:  notifying customers of a breach, possible regulatory fines, and public relations expenses related to a breach.

There are few businesses left that don’t have some type of cyber liability exposure. Consequently, it’s always in your best interest to discuss your exposure with your insurance agent and determine if coverage is appropriate for you.  If you don’t have ANY cyber liability insurance, we recommend you take a good, hard look at your exposure and realize that a simple cyber attack may be more costly than you think.

 

IL Passes Rideshare Insurance Law – Is it enough?

Chris

“Failure is not fatal, but failure to change might be”. – John Wooden

The IL legislature passed legislation that provides regulation for transportation networking companies (TNCs) – which should eliminate many insurance gaps, according to the Property Casualty Insurers Association of America. The measure will require background checks on drivers, vehicle inspections and chauffeur licenses for drivers who work more than 36 hours in any two-week period. It also requires clear disclosure to TNC drivers about insurance coverages.

The key component of the legislature is that the commercial liability insurance policy will be the primary policy from the time the driver’s app is on or he/she is available to accept a passenger. The bill has been sent to the governor for approval.

The goal of the legislation is two-fold:

1. Increase clarity on which policy is primary (personal auto vs. commercial).

2. Avoid increases in personal insurance rates

 

While increased legislation usually creates more problems than it solves, the goal of this legislation is noble. Ideally, an insurance company would step up and provide a unique and differentiated product customized for this exposure; however, it doesn’t appear as though there is any interest from any company. As the quote from John Wooden at the beginning of this post emphasizes, failure to change may be fatal. I’m hopeful that insurance companies become more flexible with their products and policies offered in this ever-changing world. It’d be a shame to let the barbaric coverage forms provided by insurance companies hinder the entrepreneurial spirit of this country.

Uber, Lyft and Auto Insurance

Chris

The Zebra, an internet-based insurance agency, recently posted a fantastic article on insurance coverage and how it relates to Uber and Lyft (the article can be found here).

Everyone loves Uber, UberX, and Lyft – and why shouldn’t they? They are easy to use, affordable, and convenient. They allow their drivers to reap the monetary benefits of taxi drivers – without any of the typical costs associated with a taxi driver. It’s a classic win-win, right!?

When you talk to Uber drivers – they often speak of how they don’t have to carry a commercial insurance policy because Uber has a ‘master’ policy. Yes, Uber does carry $1 million of liability insurance (including $1 million of uninsured motorist and underinsured motorist coverage, as well as contingent comprehensive and collision coverage). However, this ONLY applies while you are transporting an Uber/Lyft customer (as your personal auto policy has an exclusion for providing coverage while transporting people for hire). What insurance applies while you are on your way to pick up a customer? The personal auto policy would be primary and the commercial policy would provide excess coverage, as The Zebra has illustrated in this fantastic graphic.

 

Lastly, most personal auto insurance carriers would cancel your personal auto policy if they knew you were hauling people around for hire on your free time. It’s an exposure that their current pricing models do not account for. As always, the insurance industry is slow to accommodate new technology and business models; however, the state of IL has recently passed a rideshare legislation with an insurance component (which we’ll dive into in a future post).

There have been no major lawsuits against any of the large rideshare companies, yet. When (not if) one happens – it’ll be interesting to see how the insurance components will handle the situation and if $1 million of coverage will be enough to cover the exposure. As Keith McCullough of Hedgeye Risk Management says, “At first risk happens slowly, then it happens all at once”.