Corrections or additions?
These articles were prepared for the October 11, 2000 edition of
U.S. 1 Newspaper. All rights reserved.
To Lower Risk, Don’t Get Quoted
Learn how underwriters assess risk and you can lower
the cost of your business insurance, says Paula Gould of Paula
Gould Consulting Inc. on Harris Road in Princeton Junction. Gould
counsels business owners on how to make their risk profiles more
attractive
by instituting certain procedures and processes. She presents a panel
entitled “Risky Business: Managing Risk as You Grow Your
Business,”
for the Princeton Chamber’s Business Council on Wednesday, October
18, at 7:30 a.m. at the Nassau Club on Mercer Street. Cost: $21. Call
609-520-1776.
Also on the panel are Jim Proferes, Philadelphia-based assistant
worldwide product manager for directors & officers insurance, Chubb
Insurance; and Brian Mohen, managing director and specialty
broker, Arden Financial Services. The moderator is Harold A.
“Chip”
Jerry III of Jerry & Jerry LP.
“Our focus will be on types of insurance that provide enhanced
levels of protection,” says Gould. These policies can cover the
shareholder, the employee, the contractor, the owners, and the board
members, or they can focus on regulatory or antitrust issues. They
include:
Liability policies insuring corporate directors andofficersagainst claims alleging mismanagement.Employment practices policies insuring against claimsby employees.Malpractice policies — insuring such professionalsas architects, engineers, accountants, lawyers, consultants, anddoctorand health care providers — against client claims.Gould established her consulting practice earlier this yearto advise on insurance and risk management services. An alumna ofKutztown State and the College of Insurance in New York City, shewas an insurance broker for Marsh & McLennan in Manhattan for 20years,and both placed and sold insurance, including property and casualty.She spent the last two years selling insurance against wrongful acts,such as D&O (directors and officers’ liability), employment practices,and errors and omissions leading to malpractice.She was a senior vice president when the company had a merger andoffered a good package, so she left and started her own business”forquality of life issues,” she says. “For me, it has been themost creative time since high school — when I studied cello andvoice, played drums in the marching band, and was in every sport thatgirls could play.” As a consultant, she does not sell insurance,but instead advises businesses on gaps and limitations in theirinsuranceand risk management programs (609-799-6584; fax, 609-799-6754,www.gouldconsulting.com).Here’s an example of why a consultant can be useful. You may betemptedto combine insurance on employment contracts with your D&O liabilitypolicy. Gould may advise against it, depending on the dollar limitof the policy, because — if you end up defending numerous employeesuits — you could be out of coverage when the time comes to defendyourself personally. “You may not want to share your limits,”she says.To impress the underwriters, consider what they look at when theyassess your company. They look for:Rapid growth and strong financials. “The underwritersbase much of their pricing on the strength of the financial statementsthey are given, because that is how they analyze the management.”Business goals: what the goals are and what processesare in place to achieve the business goals.The staying power of the business model. It should showsolid potential growth for a minimum of three to five years.Stable ownerships. If the company has not gone public,financial information might be limited. So the underwriters look atthe track records of those who support the company.Personnel procedures. Get formal procedures for hiringand firing on paper to avoid wrongful termination suits.A Qualified board. Be sure the track record of theindividualsrunning the company is a good one.Limited media exposure. Underwriters frown on companieswith a very high profile. “They pull up Lexis/Nexis and see howmany times you have been quoted in the paper. If you are controversialor have high visibility, that makes your company a greater targetfor claims. Impressive press is great press? Not necessarily,”says Gould.”The more controversial companies make better targets, butit is more what is said by or about them that is important to theunderwriter. Some companies do not have the control they should overwho says what to the media and how it is stated. Underwriters do lookat the media to see which companies have sound risk managementpracticesfor their media events and which do not. It all gets weighed intothe pricing of the risk’s premium.”One of Gould’s former clients, a religious not-for-profit, was sovisible and controversial that she was unable to locate a companyto issue a D&O (directors and officers) liability policy. “Theyhad had a lot of discrimination issues over the years. Theunderwriterswanted $300,000 for $1 million of coverage. They were convinced bythe number of times the organization had been in the paper and thetypes of issues that were raised, that someone would sue formismanagement.”Difficult areas include the field of higher education. It has areputationfor being litigious, she says, perhaps because colleges anduniversitieshad tenure policies before other industries.”Now the high tech area is a growing area of high claims,”says Gould. Service agreements for hardware and software vendors canprovoke litigations because what is sold is ultimately not suitablefor the purposes for which it was intended. In one instance, acontractservice provider of electrical wiring — which claimed to be aspecialist in the area, knowing what has to be done and how to doit — hired subcontractors to do the work in government building.The job had to be totally redone after 14 months because the workwas not to code, resulting in litigation on who should pay for theerrors.High tech companies are often vulnerable because of their personnelpractices. “The companies are young and don’t have formalprocedures.They hire and fire at will, require long hours, and do a lot of flyingby the seat of their pants. People get disillusioned when the stockgoes down, and they sue.”— Barbara FoxTop Of PageFor Developers: Parking LawThe Eastern Paralyzed Veterans Association (EPVA)is making its new pamphlet, “Guide To Handicapped Parking in NewJersey,” available to the public via its website (www.epva.org)or by calling a hotline, 800-444-0120. The pamphlet highlights themost important provisions of the New Jersey Parking Law, includingthe requirements to use reserved handicapped parking spaces and theenforcement of them.It also includes information about the correct identification ofreservedhandicapped parking spaces; the zones in which a handicapped parkingpermit or license plate may not be used; and, the responsibility ofbusiness owners to provide reserved handicapped spaces.Top Of PageFor Builders: Entries SoughtThe New Jersey Builders Association will be acceptingentries for its annual Sales and Marketing Awards now through Friday,December 15. The awards recognize builders and their associates whohave made major contributions to the home building industry.Winners will be honored at the annual gala banquet in Atlantic Cityon Tuesday, April 3, which kicks off the 52nd Atlantic BuildersConvention.For more information on the SAM Awards, call Joy Miccio at609-587-5577.Top Of PageEdison at RutgersThanks to the Thomas A. Edison Project(www.edison.rutgers.edu)web browsers can view over a quarter of a million of the inventor’sdocuments, including lab notebook sketches, patent applications,correspondence,and court room testimony. The online documentary edition, part ofa Rutgers University project that has been in progress for almost30 years, serves as a research tool that enables users to organizedata electronically by name, date, document, or topic.When completed, project researchers will have captured about 10percentof Edison’s archives for publication on the Internet, on microfilm,and in books. The Edison Project is supported by more than 60 publicand private foundations, corporations, and individuals, with recentgrants from a division of the National Archives.Top Of PageWomenbiz.govThe Small Business Administration offers a new officeand website to help women business owners get federal contracts(www.WomenBiz.gov).It is a joint project with such organizations as the National Women’sBusiness Council and is the official gateway to more than 100procurementand acquisition sites hosted by federal agencies. The page links tothree registries for federal contracts: PRO-Net, Central ContractorRegistration, and Electronic Posting System.This very deep and complete website also has special pages on gettingstarted, getting subcontracts, locating forecasts of future work,lists of best practices, and a calendar of events. As of October,Sheryl W. Swed will be in charge of federal contract assistancefor women business owners in the office of government contracting.Top Of PageLatina EnterpriseLatina entrepreneurs are becoming a rapidly-growingbusiness segment, according to a Wells Fargo-sponsored surveyfor the National Foundation for Women Business Owners entitled”Spiritof Enterprise: Latina Entrepreneurs in the United States.”The survey included Latino women who have owned their business foran average of 12 years, and of those women, two-thirds were born inthe U.S., and one-third are immigrants who have lived in the U.S.an average of 30 years. It revealed that the 382,400 Latina-ownedfirms in the United States in 1996 generated sales of $67.3 billionand employed 671,200 people.Previous StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
