understanding construction insurance rates and premiums

8/13/2019 Understanding Construction Insurance Rates and Premiums

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Understanding Construction Insurance Rates and PremiumsCourse Outline

I. Chapter 1: Introduction to Understanding Construction Insurance Rates and

PremiumsII. Chapter 2: Introduction to Insurance Rating

A. The Rating Process

1. Rates versus Loss Costs

B. Advisory Organizations

C. Determining Insurance Premiums

1. Calculation of Loss Cost Multiplier

D. Proactive Approach to Insurance Purchasing

III. Chapter 3: Commercial Auto Insurance Rating

A. Rating the Business Auto Policy

1. Rating Owned AutosAn Overview

2. A Step-by-Step Process

B. Rating Hired and Nonowned Autos

C. Some Other Issues To Consider, Including Cost-Cutting Options

1. Assess Whether Mobile Equipment Should be Covered under the Auto Policy

2. Assess the Need for Drive Other Car Coverage

3. Be Aware of Differences in Rates between Insurers

4. Comprehensive or Specified Causes of Loss Coverage?

5. Consider Effect of Deductibles

6. Consider Self-Insuring Collision

7. What about Self-Insuring Bodily Injury and Property Damage Liability?

8. Seek to Obtain Schedule Credits, Dividents, and Deviations

9. Consider the Use of Experience Rating

10. Be Carefulif Using the Suspension of Insurance Endorsement

11. Be Ware of the Stated Amount Approach

12. Discontinue Medical Payments and Personal Injury Protection Coverage Where Possible

13. Reject Uninsured/Underinsured Motorists Coverage Where Poss ible

D. Rental Car Issues

1. Reject Liability Coverage on Rental Cars

2. Reject Accident and Health Coverages on Rental Cars3. Think Twice about Rental Car Physical Damage Loss Waivers

IV. Chapter 4: Commercial General Liability Insurance Rating

A. Bodily Injury and Property Damage Liability Coverage

B. Personal and Advertising Injury Liability Coverage

C. Medical Payments Coverage

D. Rating the CGL Policy

1. Determine Applicable Classifications

2. Identify and Understand Premium Bases

3. Select Appliable Basic Limits Rates

4. Adjust Basic Limits Rates by Increased Limites Factors Less any Applicable Deductible

Credits)

5. Multiply Exposure Units for Each Class ification Code Times the Rate for that Code

6. Assess Application of Minimum Premiums

E. Some Cost-Cutting Options and Other Issues To Consider
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1. Obtain Schedule Credit/Dividends

2. Consider the Use of Deductibles

3. Negotiate Premium Credits if Coverage Limitations Are Imposed

4. Consider the Use of Experience Rating

5. Consider Dropping Medical Payments Coverage

6. Obtain Insurance Certificates from Independent Contractors

7. Exclude Exposures for Operations Covered under a Wrap-Up Program

F. Owners and Contractors Protective (OCP) Liability Insurance and Railroad Protective Liability

Insurance

V. Chapter 5: Commercial Umbrella Insurance Rating

A. Basic Umbrella Pricing Methods

1. First Million

B. Second Million and Higher Limits

1. Decreasing Percentages

2. Increasing Percentages

3. Fixed Percentages

4. Advanced Pricing Methods

5. High Excess Layers

C. Minimum Premiums

VI. Chapter 6: Workers Compensation and Employers Liability Insurance

A. Rating the Workers Compensation Policy

1. Rating Terms and Formulas

B. Workers Compensation Rate Making in General

1. Rating the Contractors Workers Compensation Policy

2. Workers Compensation Classification System and its Terminology

3. Some Special Contracting Classifications

4. Determining Appropriate Classifications5. What If No Basic Class ification Exactly Describes the Business?

6. Dealing with Multiple Classification Codes

7. What Is Included in Payroll?

8. What about Overtime?

9. What about Payroll Limitations?

10. What about Subcontractors?

C. Other Key Factors Influencing Workers Compensation Costs

1. Experience Rating

2. Risk Control

3. Claims

4. Risk Financing5. Obtain Correct Classifications

6. Dont Forget the Effect of an Anniversary Rating Date

7. Delete Overtime Payroll Surcharge

8. Consider a Deductible Plan

9. Take Advantage of Schedule Rating and Dividends

II. Chapter 7: Workers Compensation Experience Rating

A. Experience Rating Overview

1. Eligibility

2. Experience Rating Period

3. Eligibility Rating Examples

4. Method of Gathering Data for Experience Rating

5. Combinability of Entities

6. Majority Ownership

7. Joint Ventures

8. Change in Ownership


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9. Nominal versus Material Changes

10. Continuation of Experience

B. How an Experience Modifier is Calculated

1. Definitions and Details of the Experience Rating Formula

2. Unit Statistical Plan

3. First Report

4. Subsequent Reports

5. Correction Reports

6. Application of Experience Modification7. Changes in Experience Modifications

8. Intrastate/Interstate Experience Rating

C. Some Actions To Consider

1. Implement a Loss Control Program that Focuses on Loss Frequency

2. Review Reserves

3. Ask To Review Statistical Cards before They Are Filed

4. Prepare a Test Modifier

5. Review Final Modifier

6. Correct Calculation Errors

7. Recognize the Effect of Ownership on Experience Modifiers

8. Do Not Try To Avoid Experience Rating

9. Summary

III. Chapter 8: Retrospective Rating

A. Retrospective Tabular Plans

B. Retrospective Rating Option V (Old Plan D)

C. Lines of Coverage

D. Retrospective Rating Limits

1. Subject Limits

2. Loss Limitations

E. Retrospective Premium Formula1. Standard Premium

2. Basic Premium

3. Converted Losses

4. Incurred Losses

5. Loss Conversion Factor

6. Excess Loss Premium (if Optional Loss Limitation Applies)

7. Retrospective Development Premium (Optional)

8. Tax Multiplier

9. Maximum Premium

10. Minimum Premium

F. Determing the Basic Premium Factor for a Retro Plan

1. Expense Allowance in Basic Premium Factor

2. Insurance Coverage in Basic Premium Factor

3. Putting the Components All Together

G. Paid Loss Retrospective Rating Plans

1. Advantages nad Disadvantages of Paid Loss Retro Plans

H. Three-Year versus One-Year Retrospective Plans

I. Long-Term Construction Projects

J. Wrap-Up Construction Projects

K. Large Risk Alternative Rating Option

L. Canceling a Retro Plan

M. Advantages and Disadvantages of Retrospective Rating Plans

IX. Chapter 9: Commercial Property Insurance Rating

A. Factors Influencing Property Insurance Costs


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1. Characteristics of the Property

2. Loss History

3. Deductibles

4. Property Valuation

5. Limits of Insurance

B. Property Insurance Rating

1. Insurers Use Insurance Advisory Organizations

2. Class Rating and Specific Rating

3. Loss Costs versus Rates

C. Property Rating Steps

1. Determining Basic Causes of Loss Premium

2. Determining Broad Causes of Loss Premium

3. Determining Special Causes of Loss Premium

4. Individual Risk Premium Modification

D. Some Cost-Cutting Options and Other Factors To Consider

1. Consider Higher Deductibles

2. Obtain Coinsurance Credits

3. Invest in Fire Loss Prevention

4. Install Underwriters Laboratory-Approved Roofing

5. Investigate Other Rate Credits and Surcharges

X. Chapter 10: Inland Marine Insurance Rating

A. Underwriting and Rating Contractors Equipment Insurance

1. Contractors Equipment Rating Process

B. Underwriting and Rating Builders Risk Insurance

1. Builders Risk Rating Process

C. Some Cost-Cutting Options and Other Factors To Consider

1. Obtain Individual Risk Premium Modifications2. Use Higher Deductibles

3. Pay Attention to Coinsurance and Full Value Reporting Requirements

4. Use Proper Builders Risk Values

5. Invest in Protection against Theft and Vandalism

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understanding construction insurance rates and premiums

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