In an increasingly litigious society, commercial business owners must be prepared for the possibility of a lawsuit at any time. To learn more about how Commercial Casualty Insurance can help protect companies against losses, Crain’s Content Studio spoke with Jordan Muckway, Manager, Commercial Insurance, Burns & Wilcox, Dallas/Ft. Worth, Texas.
How would you describe the Commercial Casualty Insurance market today?
J.M.: The market overall is in a hard state; rates have been historically higher and are continuing in that pattern. We may see some relief or a plateau as certain carriers have appetite changes and explore getting into a new space in casualty. I think we are going to start to see carriers take a different approach to different lines of business as opposed to the last few years.
What are some of the greatest risks related to commercial casualty?
J.M.:You can get pulled into a lawsuit from various angles for things that you may or may not have even had a part in. When there is a mistake or an accident, it opens a crack in the door to be exploited — and lawsuits can start to pile in based on a small crack. The greatest risk comes down to the legal environment in our society.
How does that heightened litigation landscape affect commercial business owners?
J.M.:We are seeing more nuclear verdicts, and we are seeing more angles of individuals getting sued than years prior. Marketing and ads for lawyers are everywhere right now, amplifying the possibility of being sued. As a result, this puts more pressure on the business owner to make sure they have the proper insurance coverage in place.
What should business owners be aware of relative to these risks?
J.M.:Even when it is not your fault or you do not feel you have any negligence in the situation, you can be brought into a lawsuit. It could be in the construction industry, hospitality, or habitational — any kind of commercial risk.
What insurance policies can help them respond to these threats?
J.M.: Commercial Casualty Insurance is very broad, from Liquor Liability Insurance to Commercial Auto Insurance. Commercial General Liability (CGL) Insurance is something most individuals are familiar with. While there are other specialized policies that will pick up different areas of casualty to have proper coverage, having the proper liability policy in place is most important. Make sure you have all coverage lines that could potentially bring you into a lawsuit and that you have the right policy forms. CGL Insurance, for example, would typically pick up premises liability and product liability — however, every policy is different and there are exclusions and limitations that could limit the carrier from responding to a lawsuit or claim that you are brought into. Many times, commercial business owners make the mistake of thinking CGL Insurance covers them for more than what it actually covers. Everyone should probably have Excess Liability Insurance now as well, giving them higher coverage limits. Talk to your broker and ask about things like defense costs outside the limits, meaning your defense costs are not going to hinder the limits on a policy.
Is there anything small businesses should know when seeking this coverage?
J.M.: A small business can easily be targeted — a CGL policy may not provide coverage in all instances. There is a lot of ambiguity as far as what may or may not be covered. Overall, being mindful of your potential risks or exposures when operating your businesses is key. Small businesses should make sure they are reviewing their coverage with their broker and have the proper policy language.
Anything else that you think is important to know about mitigating exposures for these clients?
J.M.: At a very high level, your Commercial Casualty Liability Insurance is there as an investment into your protection. There is a reason why contractual requirements have become stricter to make sure you do have those coverages to work with certain businesses. Someone probably had to pay out of their own pocket to make some of the reasons for contracts out there. You do not want your business to be the one to carry that burden when there are affordable options out there for proper protection and risk transfer.
What are the greatest opportunities for brokers to get into Commercial Casualty Insurance?
J.M.: For the retail broker specifically, I would say casualty as a whole is the greatest opportunity for you. Whether you are a commercial lines generalist or niche broker focused on one industry, become an expert. Sell that expertise and not the premium as this is the key to having success.
What advice would you give brokers to increase their success rates with these products?
J.M.: Other than selling coverage and not price, which is the number one rule, cross-sell. Bring in other lines of business: Environmental, Professional, and Excess. Offer various lines of coverage that are going to benefit the client, not just as a selling point, but as a risk advisor. Your client may not be aware there are multiple policy types that CGL Insurance does not pick up. Selling that coverage and cross-selling something they may not have been offered before can set you apart from other retailers. It also gains trust. Sales is about trust. It is not selling a piece of paper; it is selling an actual product.
Commercial Casualty Insurance
Why your clients might need it: Businesses both large and small can be targeted in a lawsuit — more individuals are getting sued now than in years prior.
Protects against: Businesses that might run into any type of commercial risk — it could be in the construction industry, hospitality, apartments, etc.
Expert opinion: “While there are other specialized policies that will pick up different areas of casualty to have proper coverage, having the proper casualty policy in place is most important. Make sure you have all coverage lines that could potentially bring you into a lawsuit and that you have the right policy forms.”
