lence, demonstrate a high level of professional integrity, and serve as thought leaders and mentors for younger generations of tunnel profes- sionals. I am very proud of them all. C+S: Are you recognized in Belgrade, and do you return there for personal and/or professional reasons?
SZ: I recently started reviving old partnerships and making new con- nections through activities with ACUUS. That part of Europe has some of the world’s brightest and bravest minds and I certainly hope it will soon be more open to worldly exchanges.
RICHARD MASSEY is a freelance writer based in Northwest Arkansas. He can be reached at firstname.lastname@example.org.
2020 Insurance Marketplace: What to Expect By Jeff Cavignac, James P. Schabarum, Jase Hamilton, and Patrick Casinelli
Department of Labor and other governmental organizations • Money spent paying uncovered losses or funding deductibles • Your time and your employees’ time spent dealing with losses • Productivity costs due to time lost by injured workers and the cost of train- ing new workers • The cost of insurance (less than 50 percent of the Cost of Risk, in many cases) Our job as an insurance broker is to help our clients manage these costs. Insurance premiums are based on a number of factors, including the type of business, loss experience, and safety practices. Any busi- ness will have a number of different exposures and require a number of different policies to provide the appropriate protection. In addition to these factors, the amount a company pays for insurance is also im- pacted by the insurance marketplace. Insurance is a supply-driven business. While demand stays relatively consistent (it will ebb and flow with the general economy), surplus can go up and down. Loosely defined, surplus is how much liquid capital the industry has in their coffers and includes money that is set aside to pay future claims as well as any additional capital held by the insurance company. Specific ratios determine how much premium can safely be written given a certain amount of surplus. If the ratio of premium to surplus gets too high, the insurance company’s credit rating (as quantified by the A. M. Best Company and other rating agencies) could ultimately impair the insurance company’s ability to operate. If surplus goes down, insurance companies must write less insurance, which causes rates to go up. Similarly, if surplus goes up, rates tend to go down. The industry’s surplus has grown significantly since 2011 (See Table 1 ) and this has resulted in flat and, in some cases, decreasing rates over that same period. 2018 resulted in the first decrease in surplus (albeit modest) in some time and this concerns many in the industry.
Insurance is a unique product — the classic intangible. You have to have it for various reasons, and the right insurance can provide your business with critical protection while opening up opportunities that wouldn’t exist otherwise. Most people view insurance as a necessary evil. After all, you might pay hundreds of thousands of dollars for a product you hope you don’t need. If you use it, it will cost more when it renews, and if you use it a lot the additional cost can seriously affect a company’s profitability. Insurance is also complex. Most construction firm owners don’t want to be experts, but they need to understand insurance well enough to be able to effectively manage it for their company. Our own clients rely on us to evaluate their exposures to loss, develop risk management strategies to lower the frequency and severity of their claims, and to ne- gotiate appropriate coverage placed with the right insurance company at the lowest realistic cost. It is also important to put insurance in perspective. As we know it, our economy could not survive without it. The financial guarantee it provides (along with surety) is the safety net that allows money to be lent, contracts to be awarded, and assets and liabilities to be protected. Insurance can be expensive. For some businesses, it can be their high- est expense after compensation. This number could double or more if you factor in the other costs of risk, such as: • Your time spent analyzing risk • Money spent on Risk Control, including salaries for Human Resources, Safety and Claims Management • The cost of educating employees on safe practices • The cost of complying with all the various laws imposed by OSHA, the
Insurance Cycle Table
$ in Billions
Net Written Premium
$418.40 $423.80 $438.0
$511.50 $556.90 $553.70
Return onAvg. Net Worth
Source: Insurance Information Institute (iii.org)
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