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Archived Articles
3/12/2009 Early last week AIG released their 4th quarter financial results and outlined a new strategy to stabilize the business and protect the value of their franchise. We thought that this would be a useful time to update you on our current thinking regarding AIG. In simple terms, we continue to support AIG for the following reasons:
We've attached two press releases (one from AIG and one from the Treasury/Federal Reserve) to give you more information about AIG's restructuring. As always, we will continue to monitor the situation carefully and are prepared to replace AIG in the unlikely event that becomes necessary. If you have any questions, please do not hesitate to call us. Jeremy R. Hitzig, CFA, CPCU 9/29/2008 Last Friday we updated you on the Federal Reserve's agreement to provide the AIG parent company with $85 billion in liquidity. This week we want to share with you what we learned in a teleconference with several of AIG's senior executives. They are working on identifying the assets that will be sold to reduce their debt to the government and hope to announce which ones those will be in the next week or so. They reiterated that the core insurance companies that support some of our various programs are not for sale. These insurance companies have capital and surplus of $26.7 billion, up 50% since 2005. 84% of this capital and surplus is invested in US Treasuries, municipal bonds, and high grade corporate bonds rated "A" or better. The states that regulate them are primarily Delaware, New York, Illinois, California and Pennsylvania. For the most part the regulators prohibit insurance companies from issuing dividends in any year of more than 10% of policyholder surplus (i.e. the maximum dividend AIG's insurance companies could dividend out at this time would be $2.6 billion). It is interesting to note that the earnings of these companies have exceeded $2.6 billion each year for the last few years, so the maximum dividends they can pay to their parent are currently covered by their annual earnings. At $26.7 billion in capital and surplus, these companies have at least double the 2007 year-end surplus of Chubb, Everest, Philadelphia, Tower, Travelers, and Zurich to name a few carriers that often compete with our programs. In addition the AIG insurance companies continue to have an "A" rating from A.M. Best, they continue to be fully supported by all of the top brokers, and the New York State Insurance Department has taken the unprecedented step of notifying the public that they have no concerns regarding their solvency or claims paying ability.
Our new business numbers this week have
started to return to normal which means that most brokers have concluded that
AIG's quotes should be compared to your other alternatives solely on the basis
of breadth of coverage, competitiveness of price, and speed and responsiveness
of service. Both AIG and ourselves are deeply appreciative of this support and
pledge going-forward that will continue to be as responsive, aggressive, and
innovative in meeting your needs and those of your clients.
9/19/2008 Wednesday brought a big sigh of relief as news spread of the Federal Reserve's rescue of AIG. The deal includes a two-year $85 billion loan and has given the Fed an 80% ownership stake in the company. The government has appointed an insurance company veteran, former Allstate CEO Edward Liddy, as the new Chief Executive of AIG. His mission is to organize an orderly sale of assets to repay the loan and stabilize the company. In addition to the U.S. Property & Casualty business, AIG owns a diverse array of assets, including life & annuities businesses, international P&C operations and an aircraft leasing division among many others. The Fed's agreement has stabilized AIG in the short-term. The events of this week also brought confirmation that despite any financial distress at the parent company, the insurance operations remain robustly capitalized, strongly rated, independent and regulated in the interest of policyholders. The insurance businesses are currently rated "A" by A.M. Best. In addition, the parent company ratings were actually upgraded yesterday morning by S&P and Fitch. The major brokers including Marsh and Aon have also clearly articulated their positions that AIG remains a healthy market and have instructed their brokers to continue business as usual.
We are continuing to monitor the situation
carefully and have developed our contingency plans in the unlikely chance that
they need to be executed. We have great confidence in continuing our
relationship with AIG for the foreseeable future. The attached link has AIG's
latest "talking
points" to assist you in any conversations you may have with your
customers. 9/16/2008 Distinguished Programs has been monitoring AIG's developments carefully over the last few days and wanted to share with you some additional information about AIG and our action plan. On Monday AIG continued to explore a variety of options to raise the cash necessary to satisfy their short to medium term needs. New York Governor Paterson approved a $20 billion financing agreement that enables the parent company to exchange longer term (and therefore less liquid) assets for shorter term assets that were being held by the insurance company subsidiaries. Notwithstanding this, the parent company was downgraded by both S&P and Moody's yesterday reflecting the rating agencies concerns about AIG's ability to raise enough additional capital to satisfy their short term cash needs. In addition, the asset exchange forced A.M. Best to review the insurance companies operations with the result that they too were downgraded (from "A+" to "A"). Despite these developments, and as you will see from this AIG communication (click to view), AIG Commercial Insurance is a separate, independent and highly regulated subsidiary. AIGCI continues to have a very strong financial position, claims paying ability and "A" (Excellent) rating by A.M. Best. In addition, we anticipate that AIG will shortly announce a series of measures to bring more certainty to the overall corporate situation.
You should know that we are prepared for any
outcome and have contingency plans in place should it be necessary to replace
AIG. We will update you again in the next day or so. In the meantime, should you
have any questions, please do not hesitate to call me directly at (212)
297-3150.
Distinguished Programs Launches Insurance Program for New York City Brick & Brownstone Building Owners 10/31/2007 October 31, 2007, New York, NY - Distinguished Programs (www.distinguished.com), a program developer that specializes in products for the real estate industry, is introducing the Brick & Brownstone Insurance Program -a comprehensive property and liability package for condominiums, cooperatives, brownstones, row housing and apartment buildings. Underwritten by member companies of AIG, the program is available to building owners in Manhattan, Queens and Brooklyn through agents and brokers. According to Carla Vel, Distinguished Programs President and COO, "The Brick & Brownstone Program fills a void in the marketplace. There are markets out there; but there is a shortage of A-rated admitted carriers who want to write smaller properties, are comfortable in urban areas and willing to deliver the quick turnaround New Yorkers expect. We've designed our coverages, processing and service standards to meet the needs of New Yorkers - the most demanding buyers in the country." The Brick & Brownstone Program is geared for owner- or tenant-occupied masonry buildings, with or without mercantile. The competitively-priced property and liability package includes equipment breakdown and options for deductibles, earthquake, flood, crime, D&O, water damage and business income. Three-year policies are also available.
Distinguished Programs has created a
dedicated business unit that will focus on New York brick and brownstone
buildings. The new unit will be headed up by Doug Legters. Distinguished Programs provides a broad range of insurance products to the residential and commercial real estate industry, including: property, general liability, high-limits umbrella and directors & officers liability, through a nationwide network of independent agents and brokers. The firm has offices in New York, Ohio, Illinois, California, Colorado and Rhode Island. Its operating units also include ReSource Pro, a back-office support and remote staffing operation in Qingdao, China, and Saranac Insurance Company, a reinsurer based in Barbados.
New Senior Housing Program by Distinguished
Programs
With our new Independent Living & Active
Retirement Program, we can help you write buildings for 55+ baby boomers that
also provide services such as housekeeping, transportation and meals. For
independent living situations, our product provides Property & Liability,
and even optional Directors & Officers liability, Crime and a $5 Million
limit Umbrella. (The Umbrella excludes transportation exposures.) Visit our Senior Housing
homepage or contact your underwriter for more information.
Distinguished Programs Rolls Out
New Streamlined Online CHIP Application
Distinguished Programs has streamlined the City Homes Insurance Program application process! With our new CHIP online application, we do not require additional applications or supplements and only require an electronic signature (unless auto or commercial exposures exist) . The online application also guarantees a 48 hour or less turnaround on your quote. CHIP is available in Albany, Alexandria, Baltimore, Boston, Chicago, Denver, Los Angeles, Milwaukee, Minneapolis, New York City, Pittsburgh, Philadelphia, Portland, San Francisco, Seattle, St. Louis, Troy and Washington D.C. See our CHIP webpage to learn more about the program, check out our CHIP brochure in PDF, or submit your Online CHIP Application now.
Distinguished Programs Adds Breach of
Contract Coverage to D&O Program
Insuring Affordable Housing
Find out how Distinguished Programs is working with independent agent Kyle McKinney to capitalize on the affordable housing industry - a niche that represents billions of dollars in commercial real estate values. Click here to read the article in Agent & Broker Magazine. Learn more about Distinguished Programs "Market level" insurance coverage for low-to-moderate income, privately-owned, multi-family housing where more than 20% of the rental income is government subsidized. This all-risk property, liability and umbrella protection is designed specifically for the needs these property owners face. One of the key features is the Business Income portion of the policy. Unlike a standard property form, it covers loss of both rents and government subsidies. The program is underwritten by standard, A-rated carriers and is available to independent agents and brokers in 46 states. Click here for the Affordable Housing brochure.
Distinguished Programs Recognized As Best In Class Program Administrator
November 2006, New York, NY Distinguished Programs, a program development and management firm that specializes in insurance products for the real estate industry, recently earned the Target Markets Program Administrators Associations (TMPAA) Best Practice Designation. The designation is designed to recognize program managers that achieve and maintain a level of excellence in their business. Distinguished Programs was one of only three agencies to earn the Designation. In order to qualify for the Best Practice Designation, Distinguished Programs was subject to a rigorous third-party evaluation of all aspects of its business; including: management performance, systems, underwriting, claims and human resources. During the course of the onsite evaluation, 45 different operating procedures and functions were reviewed and rated. David Jordan, Senior Vice President of AIG Programs, believes, The Best Practice Designation raises the bar for the program business segment of the industry. According to TMPAA president Art Seifert, The Best Practice Designation is an integral part of the associations mission to promote excellence among program administrators/MGAs. Distinguished Programs exemplifies the standard we are setting for our segment of the industry. The award was accepted by Distinguished Programs chief executive officer Jeremy Hitzig at the Target Markets Program Administrators Associations Sixth Annual Summit in Tempe, Arizona.
About Target Markets
DP featured in Rough Notes Magazine
Real Answers for Real Estates Risks - Distinguished is a Market for Commercial and Habitational Needs From strip malls to student housing, the market for real estate risks is complex and challenging, and it can be a trap for the unwary. Distinguished Programs, a program manager based in New York City, has carved out a niche, or rather several niches, in the real estate market, providing retail agents and brokers with expertise and carefully designed programs. Distinguished Programs traces its roots to the 1940s, when its predecessor was established as a small retail broker to handle co-op risks in the New York metropolitan area. In 1995 the company phased out of the retail business and became a full-time program manager and distributor. In 1987 the company developed the countrys first real estate umbrella liability purchasing group, which is still in operation today. (See Umbrellas for Purchasing Groups Provide Impetus for Growth in the March 1999 edition of Rough Notes.) Today Distinguished Programs has written premium of about $117 million and is licensed in all 50 states; it actively writes business in 48 states. The firm employs 180 people and has offices in Ohio, Illinois, California, Rhode Island, Colorado and Qingdao, China. The Distinguished Programs Group LLC is a holding company for five operating entities:
Distinguished Programs, whose target market is small to mid-sized accounts, offers a range of products, including property, general liability, high-limit umbrella, and directors and officers liability. Among the niches the firm serves are affordable housing, community associations (including condos and planned unit developments), city homes (urban residential buildings with up to 20 units), and student housing. Distinguished Programs works with a number of high-rated carriers. Just as the three most important factors in real estate are location, location, and location, the Big Three for niche program managers are experience, experience, and experience. At Distinguished Programs, many of their people have more than 30 years of experience in marketing and developing programs for real estate risks. Gaining an edge We definitely find that the market is softening, which results in some competitive pressures, says Carla Vel, president and chief operating officer of Distinguished Programs. Typically its the national carriers, that have a global approach. For the regionals, if theyre in the market, they tend to stay in it. Vel continues, What weve done to stay ahead of the curve is to develop niches like student housing, affordable housing, older buildings, and condo associations. We have different competitors in different parts of the country, Vel says, and we try to take advantage of what we do better in any given part of the country. A key focus of Distinguished Programs is developing programs for segments of the real estate industry that standard insurers tend to avoid, either because of the small premiums they generate or the belief that ISOs more generalized rating categories do not accurately reflect the risk involved. Judith Sigel, vice chair for program development, explains that for the real estate market, ISO distinguishes among rentals, condos, and commercial classes, but goes no further. Weve determined that there are far more segments, starting with occupancyfor example, student housing versus senior housing. For instance, she continues, if a student falls down, she gets up and shes fine. If a senior citizen falls down, he might break his hip. Conversely, If a student has had too much to drink and is sitting on a balcony, he might fall off and get hurt, whereas a senior probably isnt going to do something like that. At Distinguished Programs, Sigel says, A lot of what we do is about drilling down more specifically. It might be occupancy, geographic location, the age of the structurethere are so many different things about a risk we can look at to define it precisely, and on a long-term basis that gives us a better result because were serving the specific part of that niche as opposed to the whole basket of real estate.
Click on image for enlargement
Where and how we live Sigel says, What we do is step back and say, Were in the real estate business; what factors are driving where people live and how they live? It might be economic conditions, political conditions, or sociological conditions. For example, a clear trend now is that the first baby boomers are turning 60 and beginning to retire, Sigel observes. People in this market segment may be interested in moving into active lifestyle communities, she says. Weve also become very active in affordable housing, Sigel says. In this country, affordable housing is a very difficult market to underwrite profitably. It tends to be thought of as public housing or welfare housing. Its looked at negatively, and it ends up in the E&S market. At Distinguished Programs, Sigel explains, Weve been able to determine that there are segments of tax credit housing or subsidized housing that any of us would love to live in. A prime example of that is if you lived in Greenwich, Connecticut, and made $80,000 a year, you would actually be eligible for affordable housing, she says. Both local governments and the federal government are looking at affordable housing as a huge issue, and we see it as a great opportunity. Understanding the niche, under-standing what we can write and what we should never write, is an extremely valuable way for us to educate our underwriters about the products people actually need, Sigel declares. Sigel mentions additional estate trends. Many retired people are moving out of their homes and into condos where they can enjoy certain amenities and where residents must be over age 55, she says. In the South, she adds, there is growth in the construction of two- or three-story garden apartments; and in urban areas, high rises are being built for people who want to enjoy city living. Adds CEO Jeremy Hitzig, Theres a lot more specialized housing today than there ever has been before. For example, timeshares didnt even exist 20 years ago. There are also resort communities promoting active living for seniors. Each of them has unique characteristics that were working hard to understand and serve. Almost everything that happens in our world affects real estate, Sigel declares. Just listening to the news or reading the newspaper are good ways to find out whats going on. We pay attention to these things in trying to figure out what our product is going to look like and how to underwrite and price it correctly. Adds Vel: Weve created our own proprietary database, and on every submission that comes in, we collect at least 30 very specific pieces of information having to do with the characteristics of the risk: location, age, and type of construction; type of ownership and occupancy; how many stories, how many units, sprinklered or not, fire and life safety information, and so on. That allows us to slice and dice information so we can understand what the risk looks like. When we sit down with an insurance company to negotiate something or to create something new, having data is a huge strength of ours and a big way we differentiate ourselves, Sigel adds. Were not like the people who approach an insurer and say, I need this because I need it. Being able to present a detailed analysis and projections gives us a real advantage. Distinguished Programs also has retained people with unique expertise, including a former firefighter and a current firefighter and a building manager with 30 years of experience. A booming market A key trend identified by Distinguished Programs product development department is strong growth in planned unit developments, which the company views as a market with high profit potential. Earlier this year the company launched a program for planned unit developments. The most appropriate term for what were writing in this class is homeowners associations, Hitzig says. A homeowners association is an association of single-family homes. Weve built a small niche in insuring homeowners associations. Distinguished Programs doesnt insure the individual homes, Hitzig emphasizes. In a gated community there may be a guardhouse, a clubhouse, a swimming pool, tennis courtsall of those things are picked up under our program. Planned unit communities are less common outside California and the Southwest, Hitzig observes. However, he adds, In the older parts of the country, some home owners may get together for group activities, and they might form an organization with a board of directors. Distinguished Programs also insures groups like these, Hitzig says. Working with retailers Distinguished Programs operates nationwide through a network of approximately 1,100 independent retail agents and brokers. Were happy to work with an agent who has many real estate accounts, and were happy to work with an agent who has one, Vel says. Its the risk thats important to us. All of our agents are trying to do the best job for their clients, and we become a resource for them. A valuable resource indeed, if these comments from retailers are any indication: My niche is affordable housing, says Kyle McKinney of Global Insurance Network in Boston. A lot of insurance companies have stereotypes of this business that are simply wrong. Underwriters hear affordable housing and they think of the old housing projects. The fact is, in many cases you cant distinguish affordable housing from market value housing. The trend today is toward mixed housing where affordable is a percentage. Distinguished Programs is one of the few organizations that was willing to take the time to listen and understand the business. John Stathopolous, commercial account manager for Asco Insurance Services, a family-run agency in the Chicago suburb of Morton Grove, says, Companies come in and try to tap the habitational market, but they usually get eaten up and then drop out. Distinguished Programs knows the business. They understand what theyre doing. Thats enabled them to be a more consistent player. Steve Dickerson, a senior vice president who specializes in writing condo and co-op business at USI of Falls Church, Virginia, says, We use Distinguished for umbrella on habitational accounts. They approach the business the way it should be done. Theyre specialists, and they understand how to segment and underwrite the business. As a result, even during very tough market times, they have been able to bring strong, large, reputable companies to the table. Brian Berg, president of Brian Berg Insurance in Lake Forest, California, says Distinguished Programs helps him gain entre to accounts that otherwise might not want to meet with him. Getting your foot in the door with property managers of condo and homeowners associations is tough, Berg says. But if I can show them where there is a coverage deficiency, I can get in. Distinguished found deficiencies in the existing markets for community associations. Theyve differentiated their umbrella and D&O products. They offer the broadest coverage and best pricing in the market. With its depth of industry experience, market knowledge, and underwriting savvy, combined with a willingness to listen, Distinguished Programs clearly has real answers for real estate risks. *
For more information:
Distinguished Programs Launches City Homes Insurance Program (CHIP)
The Program Targets Small City Condo/Apartment Buildings That Many Carriers Shun August 8, New York, NY Most major insurers see the small condo and apartment buildings that dominate the residential neighborhoods of many American cities as bad business. The premiums are simply too low and the risk level too high. What has traditionally been an undesirable segment for top insurers is proving to be fertile ground for real estate insurance program developer Distinguished Programs. Earlier this spring, the firm began testing the waters with CHIP (City Homes Insurance Program) their new property, liability and umbrella program for condo and apartment buildings with 20 units or less and up to $5 million in insured values. The program, which is available exclusively through agents and brokers, gives small building owners the same level of coverage and deductible options available to larger property owners. Carla Vel, Distinguished Programs Chief Operating Officer, believes smaller apartment and condo buildings are treated unfairly by the industry. Weve written many of these accounts over the years and our book clearly shows that these risks out-perform standard ISO classifications, said Ms. Vel. By gearing our underwriting and rating to reflect this specific niche, we can deliver a more competitive product. Our technology, which is designed specifically for underwriting and processing real estate business, makes it possible for us to handle small accounts cost-efficiently. To date, Ms. Vels firm is seeing strong demand in the marketplace. Agents have limited options for small, urban habitational properties, she explains. They are forced to walk away from this business or use smaller, local carriers that may lack the financial wherewithal. CHIP, which is written by one of the largest and strongest insurers in the US, gives agents and building owners a new alternative. Based on the success of the test program, Distinguished Programs announced it is rolling CHIP out in thirteen cities across the country, including: Albany/Troy (NY), Alexandria (VA), Baltimore, Chicago, Denver, Los Angeles, Milwaukee, Minneapolis, Philadelphia, Portland (OR), Seattle, St. Louis, and Washington, DC. Distinguished Programs provides a broad range of insurance products to the residential and commercial real estate industry, including: property, general liability, high-limits umbrella and directors & officers liability, through a nationwide network of independent agents and brokers. The firm has offices in New York, Ohio, Illinois, California, Colorado and Rhode Island. Its operating units also include ReSource Pro, a back-office support and remote staffing operation in Qingdao, China, and Saranac Insurance Company, a reinsurer based in Barbados. Media Contacts:
Distinguished Programs Announces Management Changes; Hitzig Becomes CEO
May, 2006, New York, NY -- The Distinguished Programs Group, LLC, has named Jeremy Hitzig chief executive officer, effective April 2006. Andy Potash, founder and former CEO, will remain as chairman of the board. Carla Vel will continue in her current position as president & chief operating officer. Both Mr. Hitzig and Ms. Vel have been nominated to the companys board of directors. Commenting on the changes, Potash said, Over the last ten years weve built a terrific and innovative organization. We have an excellent management team, first-class service platform and great ideas for product development and expansion. Im confident that Jeremy and Carla will continue to broaden our product offerings and develop our real estate expertise in partnership with our insurance company and agent/broker partners. As Chairman, Im looking forward to continuing to work with them in their new roles. Mr. Hitzig joined Distinguished in 1995 and has served in a variety of capacities, most recently as senior vice president with executive responsibility for Marketing, Community Association Programs and S.E.S. Insurance Brokerage Services, a recently acquired program manager and service provider for bank managed trust property portfolios. Mr. Hitzig is a graduate of McGill University and received his M.B.A. from Columbia Business School in New York. He also holds the Chartered Financial Analyst and CPCU designations. Ms. Vel also joined the company in 1995. A real estate and program management veteran, Vel has overseen virtually all aspects of the companys operations as it has been transformed from a niche regional program player to a leading national distributor and underwriter of real estate insurance. Distinguished Programs also announced the consolidation of underwriting, marketing and claims management under the leadership of Helen English, who was recently promoted to senior vice president. Ms. English joined Distinguished in 2000 and was responsible for the structuring and placement of the companys programs with insurers and reinsurers. Jim Tesoriero, senior vice president, has assumed executive responsibility for the Community Association Programs and Branch Operations in addition to management of the firms Property Owners Program. Mr. Tesoriero joined Distinguished in 1999. Distinguished Programs provides a broad range of insurance products to the residential and commercial real estate industry; including: property, general liability, high-limits umbrella, directors & officers liability and workers compensation, through a nationwide network of independent agents and brokers. The firm has offices in New York, Ohio, Illinois, California, Colorado and Massachusetts. Its operating units also include ReSource Pro, a back-office support and remote staffing operation in Qingdao, China and Saranac Insurance Company, a reinsurer based in Barbados.
A Special Message To Our Florida Customers
October 5, 2005 The Distinguished Programs Group, LLC announced today that it has acquired S.E.S. Insurance Services, Inc. of Tustin, CA. New York-based Distinguished Programs is a leading insurance program manager for residential and commercial real estate. S.E.S. is the premier insurance program manager and service provider for bank-managed trust property portfolios. Founded in 1988, S.E.S. is the creator of the Total Insurance Management System (TIMS TM ), its proprietary system which is widely recognized as the leading trust insurance quoting and tracking platform. Clients include the majority of the nations largest banks as well as an array of other trust property and asset managers. S.E.S. is an innovator and market leader in their niche. This acquisition complements our strategy of developing products and services that meet the needs of property owners and managers, noted Distinguished Programs CEO Andy Potash. The S.E.S. team brings a strong franchise, the powerful TIMS TM technology platform and a wealth of expertise. We look forward to their joining the Distinguished Programs family of companies. Distinguished Programs provides S.E.S. with a solid platform from which to support and build our programs, added Janet White, Chief Operating Officer of S.E.S. Their expertise in insurance for residential and commercial real estate is a natural fit with our focus on insurance for the real estate holdings of trust departments. We welcome the opportunity to join the team at Distinguished. With offices in New York, Ohio, California and Qingdao, China, Distinguished Programs provides a broad range of insurance products to the residential and commercial real estate industry including property, general liability, high-limits umbrella, directors & officers liability and workers compensation. Products are distributed on a nationwide basis through independent agents and brokers. For further information please contact:
Jeremy R. Hitzig
Tel. (212) 297-3100
DP moves Property and General Liability programs to AIG NEW YORK, September 7, 2005 AIG Programs, a division of Lexington Insurance Company, a member company of American International Group, Inc. (AIG), has appointed The Distinguished Programs Group as program administrator for Distinguished Programs Property Owners Program. The Property Owners Program covers both primary liability and property insurance and is available nationwide for a range of real estate classes, including habitational and commercial properties. Property limits up to $50 million are offered, with flood and earthquake covered on a sub-limited basis. The programs supporting services include rapid policy issuance, loss control assessments, and claim handling based on protocols that expedite case resolution. We are pleased to work with the Distinguished Programs Group to provide one of the premier real estate programs in the country, said David A. Jordan, Senior Vice President of AIG Programs. This program continues our initiative to expand AIG Real Estate SolutionsSM, a recently formed unit dedicated to serving the specific insurance and risk management needs of the real estate sector. Andrew Potash, Chairman and CEO of The Distinguished Programs Group, commented, Our rigorous selection process for our real estate business led us directly to AIG Programs. We were impressed with the depth of their underwriting and services talent, and together we will grow and expand our long-standing commitment to serving the real estate industry. The Distinguished Programs Group, one of the nations largest real estate program managers, has been active in the real estate program arena for over 10 years and currently manages more than 9,000 locations across the United States. The Property Owners Program is available to licensed agents and brokers through The Distinguished Programs Group. For more information, including applications, contact Jim Tesoriero, Senior Vice President, The Distinguished Programs Group, at (212) 297-3150 or jtesoriero@distinguished.com.
Distinguished Programs Launches City Homes Insurance Program (CHIP)
Distinguished Programs announced the availability of CHIP, its new property, liability and umbrella program for small city condo and apartment buildings. The program fills a void in the marketplace and provides a viable option for smaller properties that often fall below the minimum premium levels of A-rated, admitted insurance carriers. According to Carla Vel, Distinguished Programs President and COO, "Smaller real estate accounts are often ignored by carriers. Some insurers see these customers as too much trouble for too little premium; others aren't comfortable writing in urban areas. Our ability to use our real estate experience to segment the market, tailor the product to the needs of small buyers and streamline the processing, makes this an attractive growth opportunity for Distinguished." CHIP is designed for masonry buildings with up to 20 units and $5 million in insured values. Both residential and combination residential/commercial buildings are eligible. CHIP responds to the needs of small building owners by offering low minimum premiums and a choice of reasonable deductibles. Policyholders can also opt for a specially priced $1 million, $2 million or $5 million dollar umbrella. The program is underwritten by American International Group, Inc. CHIP is currently available to agents in Baltimore, Chicago, Denver, Philadelphia, Seattle, and Washington DC. For more information contact Jim Tesoriero at 1.888.355.4626 or go to CHIP - ( City Homes Insurance Program. )
Dealing with Frozen Piping in Fire Protection Systems
The following recommended pre-loss and post loss measures do not address
every possible solution. They are intended to guide property owners with
suggested approaches to be taken in the event of freezing in a fire protection
system, restoring protection systems as quickly as possible, and taking
special precautions while the system is out of service to minimize a property
loss.
Pre - Loss Measures (before a freeze)
Post - Loss Measures (after a freeze)
Remember the TV sitcoms
Leave it to Beaver
or
Father Knows Best
? (Dont date yourself by confessing to having seen these shows as a kid
just say you watch cable reruns with your own kids.) The interesting thing
a few geezers at Distinguished remember is that these shows heroes (they
were always male, good fathers, honored and respected role models), were
insurance agents!
Improving the Outlook What to do? There are excellent, honorable professional agents and brokers all over the country and financially solid insurance companies that offer important coverage products and services and stand behind their promises. The industry serves as the indispensable backbone of the American economy. Producers can still compete successfully against the Internet and other sources, demonstrate their vital role in the business community and enhance the image of the industry. The key is to distinguish oneself by continuing professional education, full and honest communication with clients and carriers and scrupulous integrity. Its tough to discuss ethical issues without sounding preachy, but the only way to overcome outright distrust or vague doubts about the value of the work we do is to do it with high ethical standards. Agents we know who have the most success differentiating themselves tell us they try to focus on issues such as the following:
Compliance vs. Ethics We think those are useful areas to examine, and you can probably think of other, similar concerns. The point is that theres a difference between compliance and ethics. Compliance with regulations, essentially the minimum standard of behavior, will keep you out of court (sometimes!). But mere compliance is just not enough to win the hearts and minds of the insuring public who have become somewhat jaded. Ethics refers to optimal standards of behavior; the do unto others test of our relations with all parties to a transaction. Clearly, the great majority of people consider themselves ethical and strive to act ethically. Its not always easy; its a nuanced thing, and were all human. But we usually know when were doing the right thing and when were not. As far as the public is concerned today, the ball is in our court. Cold Weather Risk Management Tips
The onset of winter brings many hazards that can result in costly property
damage or bodily injury claims. Slips, falls, and fires are the most common
types of loss experienced during the winter season. The following tips
are offered to assist you in reducing your exposures.
Fire Be certain that a fire safety bulletin is delivered to every tenant in the building that includes safety tips, locations of fire extinguishers, and emergency exits and procedures. It should also be posted in common areas. While this is always a good practice, it is particularly important during cold weather. The following specific issues should be included in the safety bulletin:
Water & Plumbing
By utilizing this checklist, you can prevent many losses from occurring
and control the ones that do. This will eliminate the disruption of your
business, inconvenience to your residents, and costly repairs.
Insurance buyers have been preoccupied in recent years with property and liability insurance for terrorism losses, D & O for allegations of corporate wrongdoing, and the high cost of health insurance. While these relatively recent Risk Management issues continue to be challenging and demand attention, a less dramatic exposure, one that has existed for generations, also warrants an organizations careful consideration: Employee Dishonesty. In fact, fidelity losses might pose a greater likelihood of crippling a small or mid-size business or Community Association than the more highly publicized concerns noted above. A New York Times article in May, 2004, entitled, some might say cynically, "Hard to Trust Anyone These Days," pointed out some important facts, particularly for small business operators:
Larger businesses usually have adequate assets to overcome even serious losses from employee dishonesty. But smaller businesses may struggle to recover from such an event. The shock of a betrayal of trust at a small business can pose a psychological and financial setback sufficiently overwhelming enough to cause severe damage or even drive it out of business. And, of course, crime claims also strike at Community Associations. Here is just a sampling of the kinds of claims weve seen:
There are many common-sense Risk Management tools that most business people are aware of but sometimes tend to let slip. This can be particularly true in family-run or community-based operations where the instinct to trust partners or key employees who are relatives, neighbors or friends is understandable; but, unfortunately, sometimes nave. Here are a few tips:
Insurance against employee dishonesty is the ultimate backstop. Coverage can include, in addition to the basic dishonesty protection, other causes of loss such as theft or disappearance of money or securities, and even computer fraud. But bear in mind that most applications for this coverage will ask what preventive measures are in place, so prudent Risk Management practice must be demonstrated. Typical required controls include:
Distinguished has a Crime Program specifically designed for Community Associations that participate in our D & O Program. Dishonesty limits from $50,000 to $5 million are available through Great American Insurance Company (Bests rated A [excellent] XIV). Importantly, coverage is broadened to include in the definition of employee both property managers and non-compensated officers. Visit the Crime section of this site for more detail and an application, and dont let Crime coverage be a victim of neglect! Employment Practices Liability in Today's World If you have any doubt that EPLI is a major concern in business today, Google it: Employment Practices Liability brings up 12,400 entries its a big deal. According to the Insurance Information Institute, the median award in EPLI suits nationally rose over 30%, to $250,000 in 2003 from about $190,000 in 2000, and that does not include associated legal costs. Moreover, its not just a big business issue. In a recent article in Crains New York Business , Chubb Group revealed that nearly half the respondents in a poll of private businesses expect an employee to file a discrimination complaint with the government this year. Obviously, every producer must discuss this exposure with every business client. But whats going on? In the past decade or so expanded remedies available to plaintiffs suffering real or imagined work-related offenses combined with our generally litigious environment have caused an escalation in claims. Here are just a few of many broad factors cited in explaining this phenomenon:
Some of the things we hear about that go on in the workplace (not ours, of course) strain belief and cant be printed here after all, human behavior is unpredictable, and sometimes pretty strange! However, the most common claims usually involve wrongful refusal to hire, failure to promote, demotion, reassignment or termination; sexual harassment, coercion, slander, defamation, libel, invasion of privacy and discrimination. Being Decent Isnt Enough Unfortunately, small and mid-size businesses usually do not have the ability to establish formal risk management programs to deal with employment practices exposures. A Human Resources Department with written procedures and training dealing with the ever-increasing range of important employment issues is beyond most firms capabilities. And while common sense, fair and decent behavior might once have been the answer, regrettably this is no longer always the case. A disgruntled employee with a sense of entitlement, encouraged by colleagues or a TV or newspaper story and assisted by an aggressive attorney, can easily overmatch a well-intentioned, innocent company supervisor. The answer today is Employment Practices Liability Insurance. EPLI should be a basic component of every commercial coverage portfolio. It has become a highly competitive line of business, available from many excellent carriers at reasonable prices. Distinguished Programs Directors and Officers Liability Coverage for community associations (D-CAP), designed for many types of residential communities, includes a broad EPL coverage part. (Click on Products and Services .) Some EPLI specialty carriers offer policyholders risk management support, and every major carrier offering the coverage has an explanatory feature on its site. EPLI-related information can also be found online at several other sites not connected with any specific carrier. Here are a few names and the pages where youll find helpful material:
If You See Something, Say Something Recent terrorist subway bombings in London serve as another stark reminder of the need for vigilance in our daily activities including the management of commercial properties. Following are excerpts from a recent briefing by the New York Police Commissioner Raymond Kelly. The comments are not unique to New York City. They have universal application and relevance. "The briefing - based partly on information obtained by NYPD detectives who were dispatched to London to monitor the investigation - was part of a program designed to encourage more vigilance by private security at large hotels, Wall Street firms, storage facilities and other companies."
What British Authorities Found After The Bombing
A Lesson Learned The lesson here is the need for awareness and vigilance. In the London case, somebody may have been aware of multiple, commercial grade refrigerators being delivered to the apartment. This was clearly "out of the ordinary" for this location. Had the authorities been alerted, the bombings may have been prevented. Don't dismiss these facts because the apartment was described as a "flop house". Terrorists may select more attractive locations for their operations at any time. We urge you create awareness among your employees and residents of this important issue. The message is best summed up by the following slogan that is beginning to appear in public places throughout NYC. "If you see something, say something". Following the September 11th attacks on the World Trade Center in New York, we shared information on the need for building security and offered specific steps property owners and managers can take to minimize exposure to terrorist activity, either as a target or base of operations. That bulletin is included on this website and we urge you to re-familiarize yourself with the important information it provides. Remember, preventing opportunities for terrorists is everyone's responsibility. Claims Service: The Moment of Truth Once the policy has been issued there are very few opportunities to interact with the policyholder and demonstrate the value of the insurance coverage he/she has purchased. Responding to a loss is one of those opportunities that can either make or break a business relationship. To most policyholders claims service is like a "seatbelt". Not much attention is paid to it until it's needed; then it better function properly. the first time. We believe that's the way it should be. At DPG, we take the worry out of claims handling by proactively managing the claims process before a loss occurs. A tremendous amount of time and energy is spent "behind the scenes" making sure the process is responsive, efficient, and effective. We have developed our own "best practices" and work closely with our insurance carriers and TPA's to make sure they're followed. Our established credibility with our team of carriers and TPA's enables us to actively participate in the investigation and resolution of the claim. This includes providing high quality service during the handling of the claim. Our Distinguished claims services include:
1) Providing direct access to claims professionals who strive to ensure
that every claim is settled quickly, efficiently, and fairly.
Should you ever need it, you'll find our claims handling oversight is
truly "Distinguished".
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