Rough Notes November 2017 : Page 37

to augment the manpower and curb looting and violence in the storm’s aftermath. “We’re focused on educat-ing them that they have to have the proper licensing and contractual arrangements.” From Karen’s perspective, the security guard market has seen fewer liability claims and workers com-pensation claims, which has reduced insurance costs for guard firms. She adds that technology is helping to further reduce the firms’ exposures at on-site jobs. ÒT his combination of physical and technological defense battery and personal and advertising injury claims are the more common drivers. Plus, “armed security will still be significantly higher than an unarmed risk. Clientele can definitely be a factor. Nightclubs, bars and taverns, and concert security are among the highest risk severity clients,” she points out. One trend that Karen says is impacting claims is the increased demand on security guards to perform tasks that fall outside of their job description. “At a retail store they may be asked to move products or bring in shopping carts, resulting in injury and workers compensation claims. At a nursing home, they may be asked to deliver newspapers to the doors of resi-dents, resulting in an unmanned desk and the potential for liability claims.” Tory sees this as an issue, too, particularly within healthcare. “We’re seeing guard firms being brought into very serious claims both from the GL and workers comp stand-point. Guard firms are being called to replace or supplement private police. The guards are being called to provide not only protection, but to restrain patients and help put them on dollies.” Karen says it’s that kind of expan-sion of duties that requires the most diligence by guard firms. “Clear direction from security management instructing guards to stick to their security duties is critical. Guards natu-rally offer assistance at posts while they are stationed. Helping someone may be the courteous thing to do, but they are not hired to be concierge attendants—rather than security professionals. Good training teaches the guards to stick to their assigned duties, lessening both liability and workers compensation claims.” Blair adds that contractual and indemnification liability claims are still large claim drivers. “The review of contracts is very important to the Coverage Even with the introduction of video surveillance, coverage is tightening. “Pricing seems to be steady with no drastic changes,” says Angela Ward, assistant vice president of underwriting at MJ Kelly Company. And while new products are not being introduced, says Blair Brownyard, vice president of Brownyard Program Insurance Services, the market is still seeing products being offered that are new to the security industry, though not to insurance. “The new products that are being carefully offered by the insurance industry include cyber and drone/unmanned aerial vehicles (UAV) products offered as stand-alone and endorsements to security industry policies,” says Blair. “Both areas are proving to be endemic to the security industry, with cyber security becoming an easy crossover for security firms and UAV operations as a helpful tool in security, as well.” Blair adds that coverage is widely varying across carriers. There is an uptick in the number of requests for cyber liability, says Tory, who says he’s seen more demand for excess and umbrella limits on that, as well as higher limits for GL, workers comp, and commercial auto. “The clients’ specs are calling for those higher limits.” Ironically, pricing is being influ-enced by factors outside of the security market, he adds. “The commercial auto on the whole is experiencing a harden-ing due to the loss experience—in 2016 the combined ratios for all carriers was 110%. We believe the driving force for this is distracted driving.” That poor loss experience, Tory says, is carrying over to the other lines of business. “Carriers are not able to get all the rate increase they need to make up that 110% on the auto alone. So they’re putting those increases across all lines.” lessens exposure to liability claims because of undetected intrusion. For the same reason, we see a reduction in guard injuries.” —Karen Izzo President Izzo Insurance Services client for transferring risk. Larger settlements tend to be associated with large property management clients and retail/commercial clients who demand unfavorable contract wording for the security firm, and the client job locations tend to have more exposure in public hazards. Retailers can’t demand that the security com-panies they insure avoid a certain type of job or client, but they can alert them to the risk level of potential cli-ents in their business development,” he says. Advice Karen says that agents and brokers that specialize in the security industry can bring a level of understanding to the risk management process. She encourages brokers and agents to study the market and become more educated in existing and evolving secu-rity exposures. Also, Karen says brokers should be asking security program provid-ers about specific loss control and claims management programs pro-vided free of charge to policyholders. “Documented proof of effective claims handling results ultimately reduces insurance costs to the guard compa-nies,” she adds. That expertise comes in handy, and Angela says agents and brokers must take charge of educating their insureds. “As with any quote, properly explaining coverages and possible gaps in coverage to the insured will help the agent bind. Helping the insured understand the high probability of claims in their industry and the need for the coverages allows the insured to make the best choice for his or her insurance needs.” n Claim drivers That’s not to say that the security industry doesn’t have its own claim pressures. Angela says assault and NOVEMBER 2017 The author Lori Widmer is a Philadelphia-based writer and editor who specializes in insurance and risk management. 37

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