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2021 Property & Casualty Market Outlook

Like many other sectors of the economy, the commercial insurance industry is experiencing changes to both its market cycles and its operating procedures. In particular, 2020 brought an acceleration of a hardening insurance marketplace—one that is less friendly to insurance buyers—which is now nearly two years old. Capacity has left the market, reinsurance has become more expensive, underwriting has gotten stricter and, most importantly, premiums are on the rise for nearly every line of insurance.

In the opens in a new windowCrane Agency 2021 Q1 P&C Market Outlookopens PDF file , we discuss what is driving current trends and how to navigate them.  We also provide a more in-depth look at the year ahead, including detailed information about what to expect by line of coverage in the opens in a new windowCrane Agency 2021 Property & Casualty Outlookopens PDF file .

In any economic climate, it is of the utmost importance to partner with an insurance broker who has the experience and resources to suggest ways to mitigate risk. Implementing effective long-term risk management strategies can help businesses become more desirable to insurance companies in a difficult market and sometimes even assist in negotiating better coverage terms and pricing. At Crane Agency, we understand our clients’ needs because our organization was built by business owners and families just like you. We can help you prepare for uncertainty by suggesting the types of insurance products and services to help support your commercial and personal needs.  For more information, please contact your Crane Agency Broker, or call us today.

2019 Novel Coronavirus (COVID-19) FAQ UPDATED 3.24.2020

This UPDATED FAQ covers the general topic of COVID-19 virus to explain how various insurance policies could respond to claim scenarios related to the COVID-19 virus. If your business experiences a loss, we recommend you submit a claim to your insurer. They will give their position about coverage under your policy. No one can say for certain what might happen in the future, but we always recommend insureds should submit a claim.  As always, please contact your Crane Agency Service Team with any questions and check the opens in a new windowCrane Agency Blog frequently for updates.

opens in a new window2019 Novel Coronavirus (COVID-10) FAQ UPDATEDopens PDF file

Crane Agency Receives Top Workplaces Honor 3 Years in a Row

Crane Agency is proud to announce that we have been identified as one of St. Louis’ Top Workplaces for the 3rd year in a row.

How does a company make the Top Workplaces list? By inspiring employees.  “Top Workplaces put the employee at the center of things and focus on creating the right environment to unleash potential and inspire performance,” said Doug Claffey, CEO of Energage, the Post-Dispatch’s research partner for Top Workplaces. 

For this year, 222 organizations agreed to take the survey. Combined, they employ 94,356 people in the St. Louis area. Of those employees who received questionnaires, 46,194 responded, either on paper or online. For this year’s winners list, 150 St. Louis-area employers earned recognition as Top Workplaces based on the employee feedback.  The employee engagement survey of 24 questions gathers responses regarding issues relating to workplace culture:

Alignment – where the company is headed, its values, cooperation
Connection – employees feel appreciated, their work is meaningful
Effectiveness – doing things efficiently and well, sharing different viewpoints, encouraging new ideas
My Manager – cares about concerns, helps employees develop
Engagement – motivation, retention and recruiting
Leadership – confidence in company leaders
The Basics – pay, benefits, flexibility, training, expectations

Employees consistently rate issues of “connection” and “alignment” most important to them, while statements related to pay and benefits rate less important.  Employers are ranked among groups of similar size to most accurately compare results. Within those size groupings, companies are ranked, and those that score high enough are recognized as Top Workplaces. Crane Agency came in at number 25 out of 55 in the “midsized” category.  Midsized is defined as companies with 150 to 499 employees in the region.

For the complete article, please visit the STL Today website:   opens in a new windowSt. Louis Post Dispatch 2019 Top Workplaces Announcement

Welcome Chief Growth Officer Dave Linhardt to Crane Agency!

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Dave Linhardt – Chief Growth Officer

Crane Agency’s strategic vision for the future is growth.  We are dedicated to supporting our existing Producers and expanding our geographical footprint throughout the Midwest.  With that, I am excited to announce opens in a new windowDave Linhardt has been appointed as Crane’s new Chief Growth Officer.  Dave will be responsible for seeking new growth opportunities by identifying reputable insurance agencies to join Crane, recruiting brokers who fit our entrepreneurial model and seeking other growth opportunities that will continue to increase our brand.  In addition, Dave will be responsible for mentoring our newest Producers and providing sales support that will leverage our production teams to be the best in the industry.  He will also help develop and support carrier relationships for our offices outside of St. Louis, as well as oversee Crane’s expansion into the Kansas City marketplace.

Dave brings more than 25 years of experience in the insurance industry to his current position.  Prior to joining Crane, he held the title of Regional Insurance President for Regions Insurance, an affiliate of Regions Bank.  During his time at Regions, Dave led insurance operations in Arkansas and Texas that included managing 7 offices totaling $30 Million in revenue.  Before joining Regions Insurance, Dave was Regional Vice President with Hartford and CNA.  He was also Regional Director at Travelers.  During his time with each carrier, Dave helped cultivate talented groups of sales and underwriting professionals with one goal in mind – achieving profitable growth in a positive and rewarding culture that promotes teamwork and accountability.

If you are an established Producer or Agency Owner interested in hearing more about joining Crane Agency, please reach out to Dave by email at opens in a new windowdlinhardt@craneagency.comcreate new email or by phone at (636) 537-5011.  Also, be sure to look for our ad in the May-June edition of opens in a new windowMO Agents Magazine.

Frequently Asked Insurance Questions When Selling or Closing a Business

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Periodically clients will close or sell their business due to retirement or other reasons.  These situations can affect insurance coverage for both the buyer and seller after the sale is complete.

1. I’m retiring and going to sell (or close) my business. Do I need to worry about the potential of future law suits, once the sale is complete?

Yes. Just because you are no longer in business does not mean that your risk of a goes away completely.

2. How can I be sued if I’m no longer in operation?

This depends on the type of business entity and the nature of your operations. However, here are two examples:

First, consider a small electrical contractor that has been in business for many years. The wiring job he did six months before he closed up shop may contain a defect – say an improper connection that works loose over time. Six months after he retires – a year after he finished the job – the bad connection starts a fire in the home. Chances are good that, once the cause is identified, the homeowner will sue you for having caused the damage.

In the second example we have a CPA that did tax returns for many years. A year after he retires, a former client is audited by the IRS and it is discovered that an error by the CPA results in significant penalties being added to the back taxes now due, and the client also needs to hire an expensive tax attorney to defend him. He will likely make a claim against you.

3. I’m no longer in business, how can they sue me?

First, as a general rule, anyone can sue anyone for any reason. Even if completely frivolous, it can still be very expensive to hire an attorney to defend you and get you out of the situation.  Second, it also depends on what type of legal entity you were while in business. Sole proprietors and partners leave their personal assets completely exposed even after they sell or close the business. LLCs and corporations can offer some protection for your personal assets, but the corporate assets remain exposed. After a business is sold or closed there may be a period of time where assets remain in the corporation while details are wrapped up. It is during this period that you remain at risk.  You should review your situation with an attorney to determine the best way to handle things.

4. I’m the electrician in question #2 and am getting sued. Won’t my old insurance policy protect me? I didn’t renew it after I closed up shop since I wasn’t in business.

You likely have a problem. In our example above, the fire did not happen until after you let your policy expire. The standard general liability policy only covers occurrences that take place during the policy period. No policy in force when the fire happened? No coverage. (Note the standard GL policy will cover claims that happened during the policy period even if they are not reported until after expiration.)

5. If my old policy is no good for claims that happen after it expires, what can I do?

There are two approaches for this situation. First, you may consider renewing your policy or buying a specialty “discontinued products or operations” policy that covers at least the time period that assets will remain exposed. You’ll need to have your insurance broker check your available options.  Second, if you are selling your company, is to have the buyer add you to their policy as an insured or agree to indemnify you for the period during which you are at risk. If they will agree to this, it should be made part of your written buy/sell agreement.

For LLCs and corporations, once the legal entity is completely defunct and no longer has assets, you should be able to drop the insurance policies. You will want to review this with your attorney and also have him review how the statute of limitations or other laws may apply.

6. I’m the CPA in question #2 and am getting sued. Won’t my old insurance policy protect me?

I didn’t renew it after I closed up shop since I wasn’t in business.  You may have a problem if you didn’t take advantage of the opportunity to buy a “tail” (also known as an “extended reporting period”) when you canceled your accountant’s professional liability or let it expire. This is a special provision for most professional liability policies that allows you to receive continued coverage for claims that are later reported involving the work you did prior to quitting your business.

7. I’m not an electrician nor a CPA. I’m selling my business so I can retire. What do I need to do?

There are far too many different types of businesses to give recommendations for each in a short FAQ.  It also depends on how the buyer is purchasing your company. In general, the transaction will be one of two types: a stock acquisition or an asset-only purchase.

8. What is the general difference between the two?

A stock purchase is where you sell the entire company as it is currently structured. “XYZ, Inc.” will continue to operate as exactly the same company after your purchase. From an insurance perspective, the most important thing to understand is that the buyer has purchased XYZ’s liabilities along with their assets. They’ll be responsible for any claims that are discovered even if they took place prior to their purchase.

An asset purchase means that you have sold only the physical assets of the company, typically along with their customer list and goodwill. The responsibility for liabilities that were incurred prior to the purchase remain with you. This arrangement typically means the seller will need to change the name, even if slightly. “XYZ, Inc.” could become “XYZ, LLC” for example.

9. So, as seller, I want this to be a stock sale?

There are advantages for the seller when it comes to liability claims. However, keep in mind that just because the seller wants a stock sale or requests the buyer provide a certain type of insurance or  indemnification does not mean that the buyer will agree to it. The results of those business negotiations may increase the buyer’s risk in certain areas and thus they may be reluctant to agree to those provisions.  However, it is important that both the buyer and seller work closely with their respective attorneys, accountants and other advisors including insurance brokers. The types of insurance needed for various businesses can vary widely depending on the nature of their operations, products and business activities. Also, let your insurance broker review the indemnification and insurance sections of the buy/sell agreement. Who is required to indemnify who and under what circumstances can vary widely.

For the best possible outcome, it is most important to keep all of your advisors informed and working together as a team on your behalf.  If you would like more information on how Crane Agency can help protect you and your business, please contact us today.

Related – opens in a new windowFrequently Asked Questions When Buying A Business

Frequently Asked Insurance Questions When Buying A Business

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When buying a business, it is important to be aware of any potential insurance challenges a business owner may face depending on the type of purchase.  In this FAQ, Crane Agency will  examine the differences between a Stock Acquisition and an Asset-Only Purchase.

1. I’m going to buy someone else’s business. What insurance issues do I need to worry about?

This can be a complicated situation. Typically, the first question your insurance broker will ask you is what type of purchase – a stock acquisition or an asset-only purchase?

2. What is the general difference between the two?

A stock purchase is where you purchase the entire company as it is currently structured. “XYZ, Inc.” will continue to operate as exactly the same company after your purchase. From an insurance perspective, the most important thing to understand is that you have purchased XYZ’s liabilities along with their assets. You’ll be responsible for any claims that are discovered even if they took place prior to your purchase.  An asset purchase means that you have purchased only the physical assets of the company, typically along with their customer list and goodwill. The responsibility for liabilities that were incurred prior to the purchase remain with the seller. This arrangement typically means you will need to change the name, even if slightly. “XYZ, Inc.” could become “XYZ, LLC” for example.

3. What potential insurance issues might I face with a stock purchase?

A stock purchase means you need to review the existing liability policies (general liability, auto liability, workers’ compensation, umbrella, professional and management liability) very carefully.  In liability claim situations, it can be months or even years before someone comes forward with their claim or lawsuit. For example, consider a company that sells small household appliances. A fire breaks out in a home and, months later, investigators determine the fire was caused by the faulty toaster purchased from the business that now belongs to you.  Since the fire started before you bought the company, the claim would be paid for by the general liability policy that was in force the day the fire happened. That means you will need to report the claim under the insurance policy in force prior to your purchase. If the prior owner had inadequate insurance, or none, that means you are responsible for an uninsured or underinsured claim.

4. What does potential insurance issues might I face with an asset purchase?

An asset purchase means that while you acquire the business assets of the company, the preexisting liabilities of all types – loan and contractual obligations, lawsuit liabilities, etc. – remain with the seller. This applies even if the prior liabilities are unknown at the time of the sale.  Generally speaking, this is good news for the buyer. However, this doesn’t automatically make all problems go away. The public at large is often unaware of the change of ownership (particularly if the company name or DBA doesn’t change much). If a lawsuit or claim arises, you stand a good chance of having those papers delivered to you. While the prior owner may still end up ultimately responsible for the claim, you may incur legal expenses to defend yourself and get dropped as a defendant.  Even that doesn’t necessarily guarantee that you’re out of the picture, especially if the prior owner had inadequate or no insurance. Plaintiff attorneys can be quite the bulldogs when looking for a deep pocket. From that perspective, it still behooves you to make sure the prior owner had appropriate coverage in place. You may even want them to purchase a specialty “tail” policy that continues to provide coverage for claims that happen after the sale, but which involve products sold or operations performed prior to that.

5. What about other policies such as those for property insurance, contractors’ equipment, crime, auto physical damage and others?

Prior to the purchase, these types of policies are primarily for the seller’s benefit. As “first-party” policies, they provide coverage for the physical loss of the seller’s own property. However, for both stock and asset purchase sales, a buyer still has a general interest in knowing that the property he is buying is fully insured prior to his purchase. What if there is a fire, auto accident or embezzlement discovered just days or weeks before the closing date of the sale? If underinsured (or no insurance at all), this could greatly complicate things, even to the point of canceling the purchase of the business. With proper coverage in place, both the seller and the buyer will know that the property will be repaired or replaced to its condition prior to the loss.

6. Can I simply keep the seller’s current policies in place with no changes?

The answer to that question is “it depends.” Most commercial insurance policies contain a condition that states the policy may not be transferred to another party without the insurance company’s written consent.  This means that if the acquisition is a stock purchase and the named insured will remain exactly as before, with only a change in the underlying ownership, you may be able to continue the existing policies as-is. Even then, many insurers will want to re-underwrite the policies once they find out the ownership has changed.  If the sale is an asset purchase, this will mean that the named insured will be changing. You will not be able to assume the prior owner’s policies unless the insurance company specifically approves the change and issues a policy endorsement. Often, even if the carrier is willing to continue writing coverage, they will want to cancel the current policies and issue new ones effective the date of the sale.  Either way, we recommend that you use this opportunity to completely review the insurance program. Often you will find that the insurance philosophy of the old owner is not the same as yours. The date of the sale is an excellent time to review and update coverages, whether you maintain the existing policies or not.

7. What other issues should be considered?

It is important that both the buyer and seller work closely with their respective attorneys, accountants and other advisors as well as their respective insurance brokers. The types of insurance needed for various businesses can vary widely depending on the nature of their operations, products and business activities.  For example, some businesses may have a serious need for pollution insurance, while that may be a relatively remote potential for loss for others. Pollution can be a big issue if you are buying a building or land that may have had hazardous operations in the past. Under the Federal Superfund law, you can find yourself responsible for the clean-up of that pollution and related claims even though you had no part in creating the problem.  Also let your insurance broker see at least the indemnification and insurance sections of the buy/sell agreement. Who is required to indemnify who and under what circumstances can vary widely. Also, keep in mind that just because the buyer requests the seller provide a certain type of insurance or indemnification does not mean that the seller will agree to it. The results of those business negotiations may increase the buyer’s risk in certain areas and therefore the need for certain types of insurance.

For the best possible outcome, it is most important to keep all of your advisors informed and working together as a team on your behalf.  If you would like more information on how Crane Agency can help protect your business, please contact us today.