The Report, Volume 9, Number 2
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Strong leadership begins with practice
According to The Toastmaster, great leaders share some general characteristics. How do you stack up on these qualities?
Make others feel important. Emphasize the strengths and contributions of others rather than focusing on self-centered goals.
Promote a vision. If others accept your ideas and understand why certain goals are important, they will support efforts to work toward your vision.
Be considerate. Treat others the way you would like to be treated. You cannot coerce or embarrass others into loyalty. If you must criticize, do so in private.
Acknowledge mistakes. Admitting made an error not only makes you more human; it also encourages others not to cover up their mistakes.
Make competition positive. If you set team goals and celebrate successes, the competitive drive can be a valuable tool. Get involved and demonstrate your commitment to assist others.
Legally speaking: Accidents and events
The definition of the term accident is crucial in determining coverage on a comprehensive general liability (CGL) policy. In Atlanta vs. St. Paul Fire & Marine Insurance Co., the City of Atlanta called on St. Paul to pay damages awarded to property owners of land the city had worked on.
Summaries of the case before the Georgia Court of Appeals indicate that Atlanta had contracted with John D. Stephens, Inc. to clear, grade and obtain fill dirt from several parcels in connection with the construction of a new concourse at the international airport. The contractor obtained a CGL policy and named the city as an additional insured.
In some cases the city directed the contractor to work on property before it had acquired proper title. When the property owners sued, St. Paul refused the claims.
The CGL policy provided coverage for accidents, but the court ruled the damages were no accident. The insurer prevailed with the court’s ruling that the complaints arose from the city’s "willful and intentional entry and trespass on their property."
Northridge aftershocks
After five years the Northridge aftershocks are still shaking up the insurance industry. Damage claims have made Northridge the second costliest insured loss in history, behind Hurricane Andrew in 1992.
One factor contributing to the low initial estimates was the large number of claims submitted months after the event. Many buildings believed to be earthquake-proof sustained damage and early estimates did not include the cost of repairs and retrofitting.
Data from Northridge has prompted risk managers to recalibrate their models for calculating losses. Insurers have dropped or declined certain policies to better spread their earthquake exposure.
Since the January 17th quake, at least 14,000 aftershocks have been recorded, 11 with a magnitude of 5.0 or greater.
Major catastrophe could dwarf Andrew
Industry experts participating in a panel discussion at the World Insurance Forum in Bermuda last month offered little comfort for the P/C industry. They warned that insurers are living under the threat of a $100 billion catastrophe that could take the form of an earthquake or East Coast storm. And they believe that sophisticated computer models have only limited ability to forecast potential losses.
"The only thing we can say with any certainty about our forecasts is that the are all going to be wrong," said Bill Riker, CEO of Renaissance Reinsurance, Ltd.
The conference focused on modeling and the shortcomings in projecting losses for a major catastrophe. While Hurricane Andrew has increased the reliance on modeling, some analysts believe models based on broad geographic assumptions fall short in their ability to develop precise information.
If Andrew had gone 75 miles north and hit Miami, a substantial portion of the catastrophe industry’s $342 billion of capital would have been wiped out, Riker stated. However, he acknowledged that if there were no computer models, insurers would have no idea of the potential toll a catastrophe could take.
Self-insured P/C Market Growing
Nearly half of all commercial property/casualty business is in the alternative (self-insurance) market, and industry analysts expect that sector to grow. The reason? According to A.M. Best Co., the soft market in traditional insurance vehicles has accelerated the repositioning and restructuring among insurance companies. Insurers are following their corporate clients into the alternative markets to find mechanisms to continue to underwrite their risks.
From 1994 through 1997, the commercial P/C market grew from $131 billion to $158 billion. The alternative market now accounts for 48 percent of that total and continued growth is expected.
Industry mergers and acquisitions are also influencing the drive toward self-insurance according to Charles Fiske of Sedgwick Inc. During the first nine months of 1998, there were 75 mergers and acquisitions totaling $172 billion among P/C insurers. In 1994, the total value of industry mergers and acquisitions was just $70 billion.
The alternative market has accelerated the growth of captives, or companies formed to insure the risks of parent corporations. According to Commonwealth Risk Services, the industry has recently seen a net increase of 200 new captives a year.
Is stucco the next asbestos?
Synthetic stucco, or EIFS (Exterior Insulation and Finishing System), appears to be the next boondoggle to vex the insurance and construction industries. EIFS is a barrier wall system designed to exclude all moisture at the outer later. But if there are weaknesses in the sealants or the material is improperly installed, the stucco will actually trap moisture within the walls of a structure, gradually degrading the structure.
Most stucco homes built within the last 10 years have EIFS. Homes covered with synthetic stucco have a tendency to retain moisture beneath the sheathing when water creeps in around windows or joints. Unlike brick or siding, EIFS does not allow moisture to drain out.
The Attorney General’s Office of North Carolina has called synthetic stucco the biggest consumer disaster ever to hit the state. There are an estimated 800 EIFS lawsuits pending there. More than 15,000 homes in North Carolina have synthetic stucco, and problems are cropping up in other southeastern states.
Manufactures and contractors blame each other for the problems.
Stucco Pro, a company that specializes in moisture testing, offers a free video on the problem of moisture intrusion. It’s available by calling 1-888-DRY-STUCCO.
Making sales grow from a firm foundation
Successful salespeople share four basic characteristics according to Selling Power. They excel in these basic areas:
Knowledge of customers. Top salespeople know as much as possible about their customers. They keep their eyes and ears open and develop questions to ask each prospect to get information about their needs and goals. Such information goes into a customer profile that can help in developing sales prospects.
Knowledge of product or service. Know your service from the top down so that you can discuss all aspects of plans, advantages and benefits.
Communication skills. Great salespeople know how to listen to prospects, answer their questions and mirror their speech patterns. They also paraphrase a client’s questions and project confidence and clarity when discussing issues.
Time management. The best salespeople only seem to get more done than anyone else because they manage their time well and establish goals. They begin their day with a plan so they can measure what they have accomplished, and do not squander time on activities that don’t involve sales.
When things don’t go as expected
Everybody runs into snags or has projects that don’t pan out as anticipated. Unfortunately, most offices also have people who relish the opportunity to highlight problems created by anyone other than themselves. If you’ve run into problems with a project, watch out for the workplace snipers and prepare a plan to negotiate the minefield of armchair critics.
State your position concisely. Focus the attention on your idea instead of yourself. If another person calls attention to a project that is faltering, respond by referring to the problem and what you are doing to correct it. Don’t belabor the details.
Identify sources of trouble. Focusing on who is to blame or trying to find fault merely is never constructive and belittles your image. Instead, concentrate on the cause of the problem and explain why it occurred in nonjudgmental terms.
Identify a solution. Being a problem-solver means coming up ways to correct shortcomings. Focus on what is being done to solve the problem rather than what went wrong. Take a Now What? attitude.
Present a deadline. You’ll increase confidence others have in your abilities if you can give a time by which you will rectify a problem and meet that deadline.
Short takes
Never fire on Fridays
Management consultant Richard Deems says Friday firings are for wimps. When you fire someone on Friday, you avoid dealing with workplace fallout and you also give the severed employee the opportunity to spend the weekend telling everyone how lousy your company is. It’s far better, Deems says, to deal with terminations early in the week and early in the day so you can answer questions from other employees and give the discharged worker several days to reflect before encountering all his friends on the weekend.
Take note
Getting into the habit of taking notes can not only help you pay attention but also recall what was said and what needs to be done. Keep a notepad close at hand and important details are less likely to get lost in the shuffle.
A pain in the neck?
Computers can cause back pain, neck pain and vision problems unless you take some basic precautions. Keep your monitor 15 degrees below your line of sigh and an arm’s distance away. Tilt the top edge away from just as you do with a magazine or newspaper.
Preparing presentations
Speech coaches say the best way to overcome stage fright is to know your material thoroughly. In addition to rehearsing in front of a mirror, try recording your speech and then listening back to it through earphones as you fall asleep. When your subconscious processes the material, you’ll remember it vividly.
Set a limit on applicants
Does the job application at your company have a time limit? Management experts recommend a statement that applications are active for 30 days as a way to protect companies from lawsuits. By giving applications a designated time limit, unsuccessful applicants cannot complain if they are not considered for another job two or three months later.
ADP releases claims software
E-Inspect, a new product by ADP Claims Solutions Group, is designed to enable insurers to easily determine claims in need of reinspection. The software uses existing claims information to evaluate appropriate resinspection adjustments using the same calculations, database and user interface that appraisers used in the original estimate.
ADP says E-Inspect offers uniform reinspection results, line by line reviews of estimates, and unique "what if" scenarios to parts and repair cost controls.
For information, contact the ADP Claims Solutions Group at (925) 866-1100. WWW.CSG.ADP.COM
