“The best insurance is the one I never have to use or think about” is a mindset so many consumers have with insurance.
This philosophy might carry some truth, but when tragedy strikes, most of us pray that the piece of mind we’re paying for — our insurance policy — protects us.
As consumers, we can get caught in a reactive approach instead of being proactive. When we approach insurance hoping we never have to use it, we tend to lose sight of knowing what we’re paying for. The desire to understand this seems to rise only after a claim.
And most often, it's when you're filing those claims that the BIG QUESTION hits you: am I with the right carrier?
Protexure wants to be more than your insurance solution, but a resource to arm you with the tools to make the best decisions for your law firm. All carriers are not created equal and that can create confusion and mistrust.
The more you know how to evaluate insurance carriers the better position you’ll be in to ensure you are with a trustworthy one.
1. Look to the A.M Best Rating
There’s no easier or better starting point for the consumer than A.M Best Rating. As the oldest credit rating agency, they will help you evaluate insurance company’s ability to pay claims, debts and other financial obligations in a timely manner.
In any business relationship, especially one intended to protect your business and livelihood, trust is important. You need to feel confident of the insurance carrier’s reputation and solid financial stability.
The A.M. Best Rating will give you all of this and more as they were the first and now largest credit rating agency in the world. Their reports of over 16,000 insurance companies help consumers understand the health, stability and history of carriers.
Specifically, you’ll be informed of the carrier’s financial strength, current and projected stability and, an overall rating.
Using and understanding a carrier's A.M. Best rating allows you to make an informed decision on not just who you might be trusting now but where they have been and where they might be going. With AM Best, you have the ability to see insurance carrier’s past ratings. These past ratings will tell you if the carrier is on an upward or downward trend and can help you draw some assumptions on where they are headed in the future.
A.M. Best evaluates insurance carriers on a scale of D to A++, with D being the lowest rating and A++ being the highest. We recommend finding a carrier with a rating of A or higher.
At Protexure, we believe your goal should be to find a home with your carrier and A.M. Best is the best place to start your journey to finding that home.
2. Consult Trusted Websites
In addition to A.M Best, state bar websites and the ABA website are good resources to check in your pursuit of finding a trusted carrier.
A state bar may endorse a specific carrier or maintain a list of professional liability insurance carriers for their state.
Typically, Bar Associations will go through an extensive research and vetting process before choosing which carriers and programs to feature on their website. Therefore, you should be able to trust any of the carriers they have listed on their website.
For example, the South Carolina Bar requires insurance carriers to submit an application for review. A Professional Liability Committee conducts an assessment of each application before selecting their preferred carrier
It is almost important to note that the list of carriers on your bar local bar website is not a complete list of trusted carriers.
Just because a carrier isn't listed on the bar website doesn't mean they are untrustworthy. A local or state bar website is a great starting point for finding a trusted carrier, but for a complete list of reputable carriers in your state, be sure to check out the American Bar Association Professional Liability Directory.
Much like the individual State Bar associations, the American Bar Association has the Standing Committee on Lawyers' Professional Liability review carriers before listing them in their directory.
3. Research Years in Business
It seems natural to trust those who have been in the industry for a long time. While experience is important, how long a carrier has been providing services is not a perfect indicator of how good a carrier is or can be.
In so many aspects of life, experience matters. And specific experience matters most.
For example, a carrier may market themselves as having been in the industry for one hundred years, but they might only be doing professional liability insurance for the last two.
Finding a carrier who specializes in professional liability can be difficult, as many large carriers provide insurance to several types of insurance lines.
Additionally, a carrier’s specialization for your type of law firm can be extremely beneficial. It’s that central focus that can allow a carrier to meet your specific needs.
For example, if an insurance carrier only insures small firms, they are more familiar with the types of challenges small law firms and solo attorneys face. They can provide insight into the best ways to protect your law firm.
When you find a carrier that has insured your industry for an extensive amount of time, you can feel confident in their ability to provide coverage options and services tailored to your business.
4. Look for Premium Volume and Experience
An established carrier typically has preferred experience but also a substantial premium volume.
Specific experience and premium volume are easily found on A.M. Best and provide insight to the stability of a carrier. With a solid foundation, you can feel confident the carrier understands how to take care of your needs but also has the financial strength to support the program's claims.
Understanding the premium volume and experience of a carrier is important, but understanding the concentration of the premium volume is just as vital.
Knowing how the carrier obtains the majority of their premium, you may begin to understand how that carrier values your business.
For example, a carrier may have an established program and premium volume but focus mostly on large law firms. If a carrier’s focus is not on your size firm, your rates from that carrier might be skewed from the rest of the market.
Some insurance carriers choose to focus on small firms only. At Protexure, we only insure law firms with up to 5 attorneys. Carriers all across the industry have begun focusing on law firms of a certain size as a means to provide a better service and more consistent premiums to their insureds. You can also find programs specializing in various sized law firms such as up to 25 attorneys or up to 50 attorneys.
In a lot of ways, the more a carrier can focus on law firms of your size and profile, the better you should feel about the rate you're being charged and their ability to protect your law firm.
Knowing the carrier has experience handling firms of your size and that your claim will be handled is an excellent indicator of trustworthiness.
The best source for this kind of information is actually the carrier themselves. If you find yourself on a call with the carrier, it’s in your best interest to ask what lines of insurance the carrier specializes in but also what size firms are their focus.
5. Know Your Claims Team
Understanding the makeup of a carrier builds trust but maybe none more important than the claims team.
When making a decision on a carrier, asking questions about your potential claims team is vital. The claims team will handle your claim from start to finish and has a significant impact on how it’s resolved.
Questions you should be asking each carrier include:
- How big is the claims team?
- What is each adjuster's experience in claim handling?
- What is each adjuster's experience handling professional liability claims?
- Is it typical that one adjuster handles the claim from start to finish?
Not all claims teams are the same and you’ll find different claims teams have different experience levels, focuses and claim-handling strategies.
Your ability to ask the right questions will allow you to gain a trust level in a carrier that should make you feel comfortable that if a claim needs to be reported, your needs and livelihood will be protected properly.
Selecting the Best Professional Liability Insurance Carrier
In a world where information is available to us almost instantly, our ability to trust can be hard. It’s important to know the right questions to ask and what the answers mean.
When a consumer has the ability to do this, it’s not just creating trust but also stability for your business.
If you use the resources mentioned, you will empower yourself with the tools to take control of your firms’ protection. Those tools will create a greater peace of mind that you have selected the right carrier for you.