Q: What can Hawaii businesses do to lower their insurance premiums?
A: For larger businesses, ask for high property deductibles and medical deductibles for workers’ compensation. Otherwise, there really is no magic bullet when it comes to lowering insurance premiums. Run a tight ship, get a good insurance agent and foster a culture of safety at work. Doesn’t matter if the business is a one-person show or a large multinational corporation, it all boils down to limiting losses. Fewer claims usually mean lower premiums.
Q: Do Hawaii businesses generally pay more for insurance than mainland companies?
A: We are fortunate to live in the technological world, so geographical location is not much of a factor. We can attract the attention of all insurance carriers, both locally and on the mainland. We have a decent number of choices available.
Right now, premiums here are basically about the same as on the mainland, but things change rapidly in the insurance world. Premiums on most lines of property and casualty insurance in almost every part of our country have been spiraling downward for the past several years. Insurance can be obtained today at a significant discount when compared to a decade ago. This so-called "soft market" in prices will not always be. It is cyclical in nature, and business owners need to be prepared for change. It is about the only constant in all things.
Q: What are the business insurance issues that are unique to Hawaii?
A: I have clients in the transportation and logistics sector of the economy. These relationships have shown me how our geographical isolation creates some very unique exposures for local companies. Beyond the obvious catastrophic hurricane and tsunami threats, business owners face supply chain logistical issues that are far more fragile than what most of their mainland counterparts usually see. Being out here in the middle of the Pacific makes planning for business interruption exposures important.
Q: Do businesses with active websites need to consider insurance to protect against claims in conjunction with their site?
A: Not just consider it, get it.
Most companies really need this coverage. The Internet has changed the way business is done and continues to shape the business world. It should come as no surprise to hear then that cyber-liability is one of the fastest-growing segments of insurance litigation today. Creating a website is easy. Dealing with the exposures it creates is not. To put it in a nutshell, anyone with a website now has essentially the same legal liabilities as a traditional publisher like the Star-Advertiser. Things like copyright infringement, invasion of privacy and defamation all come into play. Your standard commercial general liability policies exclude this coverage. A business owner certainly needs to understand the liabilities associated with disseminating information, collecting information or storing data online as well as the exposures of e-commerce if applicable to their business model.
Q: What are the most common mistakes Hawaii business owners make about insurance coverage?
A: I could write a book on this question alone. Here are the top three:
No. 1: Not preparing for the worst-case scenario. Long before I was ever in insurance, a businessman I consider wise and successful told me, "One of the key elements to being successful in business is to work hard and be eternally optimistic but be prepared for the worse-case scenario. Should that worse case play out and you’ve planned for it, your business will survive. Look for coverage first, and buy as much insurance as you can afford because even monkeys fall out of trees. I know because insurance once saved my company."
No. 2: Buying insurance based on price alone. I understand that price is important, but what you get with that money is even more critical. With insurance the key is coverage. Coverage, coverage, coverage. Did I mention coverage? Ask a lot of questions, assume nothing and be sure to carefully review the exclusions on policies you purchase.
No. 3: Not giving enough forethought to the broker selection process.
Selecting the right agent and agency is an important decision facing business owners today. Be thoughtful and thorough in the search as it is as important as selecting an accountant, attorney or banker. Be sure your agent is familiar with your line of work and is available when you need them. Find out what services the agency offers. Things like claims servicing and loss prevention services are an important part of the total equation.
Interviewed by David Butts. "Akamai Money" seeks out local experts to answer questions about business in Hawaii. If you have an issue you would like us to tackle, please email it to business@staradvertiser.com and put "Akamai Money" in the subject line.
