PURCHASING INSURANCE Townships Don't Have to GO IT ALONE When Shopping for Asset and Liability PROTECTION
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PURCHASING INSURANCE Townships Don’t Have to GO IT ALONE When Shopping for Asset and Liability PROTECTION Purchasing insurance for a public entity can be a daunting prospect, especially for anyone who is not experienced in reading and understanding policies. Rather than trying to go it alone, most townships rely on a trusted broker to help them navigate the ins and outs of municipal insurance. BY BRENDA WILT / ASSISTANT EDITOR 30 PA TownshipNews AUGUST 2020
I
“When interviewing a potential broker,
nsurance is one of those necessary
things in life that we know we ask how much business they do with
need but would rather not have to
think about. After all, an insur-
government entities and which ones.”
ance claim means that an acci-
dent or other loss has occurred.
Townships, like commercial busi- negotiate with multiple carriers to find through the process and act as a go-be-
nesses, need to protect their assets, or the best fit for the municipality. The tween for the township and the insur-
property, and also protect themselves township must do its part, too, to help ance companies. There are two ways to
from liability if someone were to get the broker present a complete picture of go about this. The township can issue a
hurt while using a township facility. the municipality to the insurance com- request for proposals and receive quotes
Property and casualty insurance covers panies to ensure accurate quotes. from multiple brokers and then whittle
these potential incidents. them down to the preferred individual
Of course, these are not the only Finding a good adviser or agency.
kinds of insurance townships need, and When shopping for insurance, town- “You want to ask about their experi-
navigating the maze of policies can be ships basically have three options. (As ence working with municipalities,” says
challenging for any township official or a professional service, insurance is not Paul Pugielli, senior vice president of
administrator no matter their experi- subject to competitive bid requirements.) Brown & Brown Insurance in Bethle-
ence. For someone new to municipal The first, and most challenging, is to hem. “You also want a broker who has
government, it could prove to be a long contact insurance carriers directly and many accounts with the carriers.”
lesson in paperwork and patience. work through the process without help. Floyd agrees. “When interviewing
The good news is that townships “I don’t recommend it,” says Brian a potential broker, ask how much busi-
don’t have to go it alone. Although Floyd, vice president of employee ben- ness they do with government entities
talking to multiple agents and sifting efits at Gunn-Mowery, a central Penn- and which ones,” he says. “I would be
through numerous quotes and cover- sylvania-based insurance agency. “This reluctant to use an agency that doesn’t
age is one option, it’s the least recom- approach can be overwhelming, talking have that experience.”
mended or used by municipalities. A far to dozens of carriers.” The other way to find a broker is
better approach is to secure the services Making sense of complex insurance to talk to other municipalities, put to-
of a good insurance broker who will policies can be daunting, and if you gether a potential list, and then choose
don’t work in the industry, it can be two or three to talk to. Ask the same
Townships have to do some home- difficult to know if you are getting com- questions about their municipal experi-
work to determine how much cover- parable quotes, he says. ence and settle on a broker that you feel
age they need, such as inventorying Alternatively, townships can choose you can work with.
all assets and reviewing their history an insurance broker to walk them The third option is to hire an insur-
of claims.
AUGUST 2020 PA TownshipNews 31
East Hempfield’s Schweitzer says the plete information so the carriers get a full
PURCHASING township has developed a good rela- picture of what the municipality needs.
INSURANCE tionship with its broker over the years. The broker can help with that, too.
“I can call or email claims and know “The challenge can be that a carrier
that they are handled,” she says. “They gives a quote based on the informa-
assist with the applications and main- tion that the township provides,” Floyd
tain our policies. I feel they earn their says. “Township officials may not think
brokerage percentage.” about certain kinds of coverage and so
ance consultant to walk the township the information may be incomplete.”
through the procurement process. How- Expediting the process A good broker will act as a consultant
ever, a good broker can serve the same Once the township has settled on and make sure the township provides
purpose. a trusted adviser, the real work of pur- the right information to get all the in-
“We rely on the expertise of our chasing insurance begins. surance it needs, he says.
broker,” Cindy Schweitzer, manager of “Each agency represents different The township should expect to pro-
East Hempfield Township in Lancaster insurance carriers,” Floyd says. “The vide the following:
County, says. “A broker who is looking broker expedites the process to get mul- • Copies of its current budget and
out for the municipality’s best interests tiple quotes at one time. He can often audited financial statements for the last
is crucial. We ask questions during ev- get a better deal, too, if he has multiple one to three years.
ery renewal period, and a good broker policies with the carriers.” • Loss runs, essentially a list of
will also point out problem areas.” This is where the advantages of hav- claims filed, for the last five years. In-
Finding a broker that you can form a ing a broker become clear. This person surers can provide this information to
good working relationship with is criti- uses his or her many years of experi- the township almost immediately upon
cal because after purchasing insurance, ence in the insurance industry to break request. Be sure to include informa-
the broker will continue to provide cus- down the policies and explain their tion on why a claim was filed and what
tomer support for claims. differences and then recommend those corrective measures the township has
“You need to have trust and confidence that offer what the township needs. taken to prevent the situation from
in your broker,” Floyd says. “We consider To ensure accurate quotes, the town- happening again.
our clients to be trusted partners.” ship must do its part by providing com- • Copies of all insurance policies.
• A list of vehicles, their usage, cost
when new, and gross vehicle weights.
• A list of drivers, dates of birth, and
driver’s license numbers.
• Vehicle usage policies.
• Any special equipment on the ve-
hicles.
• A list of all township buildings, in-
cluding park pavilions and sheds, with
descriptions, year of construction and
any upgrades, estimated replacement
cost for each structure and its contents,
and protective measures, such as smoke
alarms, fencing, or security lighting.
“You don’t really need an appraisal of
your assets but you need to have a true
understanding of their value,” Floyd
says. “You want a policy that covers
the replacement value, rather than the
market value. Be consistent with the
information you provide for all of the
carriers.”
The broker will take the information
and negotiate with the best carriers and
then bring the quotes back to the town-
ship and recommend the policy that
the broker thinks is the best fit for the
township.
The benefit of having a broker make
the analysis is that someone who works
32 PA TownshipNews AUGUST 2020
in the industry can better understand
the policies and make sure they are “Each agency represents different insurance
comparing apples to apples, Pugielli says.
“The only time you should read your
carriers. The broker expedites the process
policy is when you have trouble sleeping
at night,” he says. “Policies are not writ-
to get multiple quotes at one time.”
ten in layman’s terms.”
While price and plan design are im-
portant, Floyd says, the broker will help
you understand what the policy actually
covers.
Going for a dip in the pool
Another option for townships when
purchasing insurance is to join an in-
surance pool. This is a group of munici-
palities that band together to collective-
ly share in each other’s loss exposures to
secure better insurance rates and cover-
age due to their increased buying power
as a large, similarly comprised group.
A pool operates like a for-profit in- its administration, claims handling, and quality insurance products to its mem-
surance carrier by collecting premiums, purchase of excess reinsurance. ber townships. More than 4,000 town-
paying losses, and purchasing reinsur- For example, the PSATS Unem- ship officials, employees, and family
ance. It normally provides other im- ployment Compensation Group Trust members are covered under its health,
portant services, such as loss/risk con- Fund has more than 1,150 township Medicare Advantage, dental, disability,
sulting. A pool will typically achieve participants. The PSATS Municipali- vision/hearing, and life insurance plans.
savings through an economy of scale in ties Health Trust offers a full range of Pools work year-round and not just dur-
AUGUST 2020 PA TownshipNews 33
PURCHASING
INSURANCE
ing the “dog days” of summer.
“The real benefit is that pools are
created specifically for the purpose of
insuring their members,” says Richard
Atkinson, senior vice president of the
HDH Group, an insurance broker. “By
contrast, stock insurance companies are
designed to be profitable for shareholders.”
Insurance pools have thrived be-
cause their members remain loyal to
them, he says. Townships cannot get
every kind of insurance they need from
a pool but generally can purchase work-
Although it is a good idea to “shop around” for insurance quotes every few years or
ers’ compensation, general liability, auto
when assets change, once a township finds a trusted broker or agent, it should stick
insurance, and equipment insurance. with that adviser, experts say.
For other kinds of insurance, such as
cyber liability, employment practices li-
ability, and fiduciary liability, they have “While we have sought a proposal from few years or whenever new assets are
to go outside the pool. a competitor, given the many years of added.
East Hempfield Township has pur- our relationship with Susquehanna “You want to look at this every three
chased workers’ compensation coverage Trust, there was no reason to change.” to five years or more often if there is
from the Susquehanna Trust & Invest- a huge spike in your premium but no
ment Co. in Lititz, Lancaster County, Shopping around claims,” Floyd says.
for many years. Although municipalities participat- He recommends against shopping
“The trust oversees the workers’ ing in insurance pools tend to stay put, for insurance quotes too often, though.
compensation claim filing, and the rates experts recommend shopping around “If a carrier is invited to quote every
are very competitive,” Schweitzer says. for new insurance quotes at least every year but never gets your business, it will
34 PA TownshipNews AUGUST 2020
AUGUST 2020 PA TownshipNews 35
“The only time you should read your
policy is when you have trouble
PURCHASING sleeping at night. Policies are not
INSURANCE
written in layman’s terms.”
Never asking for new quotes is not a “Once you’ve established a good re-
get more aggressive with its quote or good way to do business, Pugielli says. lationship with an agent or broker, stick
may not quote at all,” he says. The township may miss out on savings with that person,” he says.
When selecting a broker, include or better customer service. East Hempfield’s Schweitzer says the
in the contract that periodically, on a “If I were an elected official, at least township usually requests proposals
schedule the township sets, the broker every five to seven years I would want to from brokers when there is a new con-
will get new quotes. get other quotes,” he says. “I don’t think I tingent of supervisors on the board.
“About every three years, we re- have a single client that is with the same “The benefit is that occasionally bro-
quest that our broker seek new quotes insurance company that it had 30 years kers have access to different carriers,”
from the carriers they have access to,” ago.” she says. “It gets complicated, however,
Schweitzer says. “We will also get new A broker that has his client’s best when brokers represent the same car-
quotes if there is a change in the insur- interests in mind will be thinking about riers. Carriers will usually only quote
ance market, in which case we would it much more often than that, however. to one broker so they request letters of
look to the broker for advice.” “Brown & Brown has an internal representation from the municipality,
Tyrone Township in Adams County procedure that four months before a which shut out other brokers from ob-
has its broker solicit new quotes every client’s renewal, we look at the client taining a quote.”
two years, Russ Raub, chairman of the and the insurance company to see if we ***
board of supervisors, says. should seek quotes from other carriers,” Purchasing insurance for a public
“The benefit of having an indepen- Pugielli says. entity is a challenging task. There are
dent broker is that she can get quotes Floyd cautions against shopping many things to consider, and the aver-
from multiple companies,” he says. around for a new broker, though. age township official or staff person is
generally not well-versed in the ins and
outs of insurance policies.
Securing a trusted adviser, either an
independent broker or consultant, can
make the task much easier. Indepen-
dent brokers obtain quotes from mul-
tiple carriers, giving them a deeper pool
from which to draw.
“For brokers, it’s a lot of work,” Floyd
of Gunn-Mowery says, “but for a town-
ship to go directly to a few carriers
and get proposals back, it can be over-
whelming to make sense of them.
“I truly believe the consultative
work and the expertise that the broker
brings are very valuable. Just the value
of time saved for the client is worth
something.”
For townships that have no idea
where to start to find an agency or
broker, Floyd suggests turning to the
Insurance Agents and Brokers Associa-
tion at iabforme.com. This site provides
information on agents and brokers in
Pennsylvania, Maryland, and Delaware.
“Whatever you do, make sure to
find a broker who has experience with
municipalities and with whom you can
work well,” he says. “That’s the most
important thing.” F
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