News Currents

N.Y. agents protest reported incidents as ‘red flags’ for rating

New York agents want insurers to stop and think before penalizing small businesses that report incidents where no paid claims result.

The Independent Insurance Agents & Brokers of New York Inc. has sent a letter to 26 insurance chief executive officers asking them to change the way they view the claims history of businesses.

IIABNY Chair Sharon Emek said the group is asking insurance executives to “consider the circumstances surrounding the reporting of an incident.”

The letter requests that CEOs determine “whether an incident is being reported for information purposes,” or to make a formal claim.

“There are a lot of factors that determine the price and coverage of an insurance policy,” said Emek. “One of those factors is how well a business manages its risk. Any insurance company views a high frequency of claims as a red flag.”

She said independent agents and brokers encourage commercial insurance policyholders to report all incidents, regardless of how minor because by reporting quickly, a business protects itself against future liability.

However, most of the information-only incident reports do not result in paid claims, according to Emek.

Still, some insurance companies view this reporting as a claim and view businesses with frequent claims as higher risks. The result could lead to an increase in rates or non-renewal of policy, even if no claim is paid, IIABNY contends.

In addition to the dangers of multiple claims, businesses risk denial of coverage if they do not file a claim in a timely manner.

“I know first-hand that minor incidents happen and never result in a claim; yet as a business, you need to protect yourself from a potential denial for late notice if an incident does evolve into a real claim. Insurance companies should not punish businesses for doing what they want them to do in the first place,” Emek said.