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Annual Meeting. January 15, 2008. Ag Insurance Myth, Reality & the Future. Presented by: David Stiltz Scott Aukes. I. Myth. Quoting my insurance every year is the best way to control insurance costs. Maintain profit margins Insurance is an expense Let insurance agents duke it out.

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annual meeting
Annual Meeting

January 15, 2008

ag insurance myth reality the future
Ag InsuranceMyth, Reality & the Future

Presented by:David StiltzScott Aukes

i myth
I. Myth
  • Quoting my insurance every year is the best way to control insurance costs.
    • Maintain profit margins
    • Insurance is an expense
    • Let insurance agents duke it out
reality
Reality
  • Information provided
  • Pricing
  • Coverage
  • Service
  • Timing
future
Future
  • Insurance is a tool not a product. Buy it like a tool.
  • Cost-benefit analysis
  • Risk
    • Property
    • Loss of Income
    • Human – Your employees
    • Liability
future continued
Future (continued)
  • How do you evaluate risk
    • Avoid it
    • Prevent it
    • Retain it
    • Transfer
    • Combination of any of the above
future continued1
Future (continued)
  • Implement a strategy
    • What is your current program?
    • Who designed it?
    • Will it stand the test of a significant claim?
side note
Side Note:
  • MAINTAIN YOUR STOCK VALUES
ii myth
II. Myth
  • I have a safety program. It’s right thereon the shelf.
    • Government Regulations
    • Insurance makes me do it
    • I value my employees and my company
reality1
Reality
  • A solid safety program is worth the most when insurance is at its worst.
soft market conditions
“Soft” Market Conditions
  • Lower prices
  • Highly competitive
  • Insurance companies take more risk
  • Safety component – Not as stringent
hard market conditions
“Hard” Market Conditions
  • Increased pricing
  • Selective
  • Insurance companies not willing to take risks
  • Safety component – Very stringent
the insurance company will do it
The insurance company willdo it
  • Eyes and ears of the underwriter
  • Not enough manpower
  • Territory size will not allow it
  • Not cost effective
  • Not on site every day
  • Great programs – use them
compliance provider will take care of it
Compliance Provider will take care of it
  • Provide a great service
  • Menu driven
  • Not on site every day
future develop and maintain a quality safety program
Future – Develop and Maintain a Quality Safety Program
  • Hidden costs
  • Control frequency & severity
  • Protect your assets
  • Protect marketability
establish safety goals
Establish Safety Goals
  • Safety rules or safety suggestions?
  • Same Fingers / Toes / Eyes / General Health
  • Unsafe acts versus unsafe conditions
  • Influence employee decisions
  • Top down management
  • Who is responsible for productivity and profitability?
iii myth
III. Myth
  • My work comp mod is “something” I get anotice on once a year and it is a measurementof how my losses have been. I have no more control over it then the rate of my taxes.
the work comp mod myth
The Work Comp Mod Myth
  • Experience Modification is designed tomeasure whether your company’s workers’ compensation losses (experience) is betteror worse than average
  • Fairness versus responsibility
  • Basic Mod Formula = “Your company’s losses / Average company’s losses”
reality2
Reality
  • National Council on Compensation Insurance (NCCI) mails you a copy of your “ExperienceModification Worksheet” once a year.
    • Provides insight
    • Benchmark
future1
Future
  • Manage Your Mod
  • Remember – 1.00 Mod is “average”
iv myth
IV. Myth
  • The insurance company / independent auditor determines my workers’ compensation audit.
reality3
Reality
  • You can control your audit
    • Understand the rules
    • Know & understand class codes
    • Division of payroll. Is your computer system set up to handle it?
    • Control the audit
v myth
V. Myth
  • I’ll turn the claim over to the insurance company and let them handle it. It’s their money, they will manage it well.
reality4
Reality
  • It’s your premium dollar
  • Insurance company motivation
  • It’s your property
  • It’s your customer
  • It’s your loss ratio
reality5
Reality
  • Unreimbursed costs
    • Employee “down time”
    • Reputation
    • Retraining costs
    • Paperwork
    • Scheduling changes
future2
Future
  • Take an active part in the claim process
    • Post Accident Management
    • Effective Return to Work Program
      • Emphasizes the value of the employees
      • Lower dollars spent on a claim
      • “Oprah Syndrome”
      • Light duty means a pay scale equal to the job performed.
conclusion
Conclusion
  • It’s your insurance program. Manage it.
  • Safety Management is essential, short term and long term.
  • Manage your workers’ compensation program. Claims, Experience Mod, & Audit
conclusion1
Conclusion
  • Take an active role in managing your claims. It’s your money; make sure it is being used effectively.
  • Buyer of the future will analyze his risks and understand that hidden costs can be more detrimental than the premium dollar amount paid to the insurance company