What Owners Need to Know About Risk and Business Insurance – Josh Fifield

Understanding business insurance may not be the reason you went into business in the first place, but not understanding risk, coverage, and compliance could undermine everything you’ve worked so hard to achieve.

In today’s interview, we talk with Josh Fifield, Senior Account Executive at Clark Insurance. He shares some new forces that could be driving up your costs, including Social Inflation and Social Engineering, and what you can do to protect what you’ve built.

Rich: Our next guest is a senior account executive at Clark Insurance. His insurance career began in 2004 as an underwriter at MEMIC. He joined Clark in 2008, where he enjoys providing proactive strategies for his customers to control their costs, reclaim management, safety training, and experience rating forecasting. He prides himself on product knowledge, excellent customer service, and strategic coverage recommendations. In 2016, he was awarded Co-volunteer of the Year by the Maine Real Estate and Development Association. He is currently vice president of MEREDAs, board of directors and vice chairman at Town and Country Federal Credit Union. He’s also served as safety director for Portland Little League. He’s a volunteer coach for his local youth soccer, basketball, and softball teams. We are very happy to be speaking with Josh Fifield. Josh, welcome to the show.

Josh: Thank you for having me. I’m glad to be here.

Yury: This is exciting, Josh. As a young boy, did you dream of becoming a senior account executive in insurance? Was it something that you just said that one day when I grow up, that’s what I want to be? So, what led you on this path?

Josh: Yury that’s a really good question. I actually gave insurance a very strong stiff end for a very long part of my … Because insurance is my second career, right? So like Rich, I’m actually originally a marketer and so I’m actually probably one of the original boomerangs. So I actually left the state of Maine after college and decided to return to Maine to take a job working for Channel 6. And I thought long and hard about the career of what I was doing and I really decided that insurance was something that was always maybe something I was considering and my family was a part of it.

Josh: So on my dad’s side and my mom’s side, they both had insurance agents and so it was always maybe considered I might go that route for a career. I wanted to explore my own path. And in doing so it led me back to insurance because like marketing, you can wear many different types of hats and in insurance, you work with many different types of companies. And I found that to be really appealing is that you can step into someone else’s type of business or a company and learn about what they do and then you have the chance to step out and go work into another different company. And that became more fascinating to me is because I generally like to help a lot of folks. And what better way to do that? By helping multiple types of companies and multiple types of employees and multiple types of business owners.

Josh: So the answer to that question is no, but I’m super happy that I made that choice and it’s a choice that I would love to see more folks get into nowadays. And something we’ve been doing a good job of trying to promote and helping USM start a risk management program. And so really trying to get out there and talk to those individuals and say, maybe not consider a different career just to maybe think about insurance as your first career and your only career.

Yury: Well, you’re saying that you want to promote this in your field. Is there a shortage of workforce? Or what’s going on there?

Josh: So I’m in my early forties and so I’m a senior account executive, right? And so there are more seniors above me and they’re retiring at a fast rate and there’s some really great opportunities for individuals to get into this industry right now. And it’s pretty dynamic and it’s one of the few, I think, jobs where you have to make two separate sales. And let me explain that. So we work with customers and we also represent insurance carriers. So as an independent agency we have to make a sale to our client in order to get the business. We also have to then turn around and make that sale to the insurance company. So it’s very dynamic in that respect. In that we sit down with a customer, we discuss all the application process, we think about what they need from a coverage standpoint. We take that information and then we think about all the different carriers that we represent.

Josh: Each carrier will have an underwriter assigned to our agency where we can sit down and discuss what is it about the application that they may be interested in quoting and providing a policy for. Not all companies would be interested potentially and some companies may have more questions. So we really wanted to do a very strong pageant application process so to speak and make sure that we can promote and the company in the best light possible and so they can get the best products at the best cost.

Rich: Awesome. Thank you. I’m just wondering what that Thanksgiving was like when you were like, “I’m going back into insurance and the entire family’s like woohoo! It’s in the blood.” Josh, what’s going on in the marketplace right now that business owners should be aware of?

Josh: A lot and I think you can … I mean if you walk out your front door, you’ve got what, 10 to 17 inches of snow potentially at a very early time of the year. So on average we don’t see snow like this early December, right? Sometimes we do last year it started in November. What’s that’s doing is it’s creating more accidents. Unfortunately, we’ve had more folks coming from out of state who are also bringing with them their own social norms and maybe instead of like reaching across the table to shake hands to do a deal, they may instead send their lawyer across the side. And that’s raising, unfortunately some costs when it comes to liability when they’re coming from out of state or if they’re not used to driving in snowy weather in Maine, it’s hard. Accidents are on the rise. We have three full time staff members who take claims all day long.

Josh: And I would say on average, 90% of those claims are auto-related. And cars are a little more fancier, they have more electronic in them. And so those costs are rising. So we’re seeing some increases overall when it comes to auto insurance rates. Liability rates are spiking a little bit. There’s this term that we’ve heard a lot of the carriers are referring to called social inflation. And we’ve had to wrap our heads around that, what does that term social inflation … And I did get some information here about some key drivers and around that. And it’s interesting because when we talk to our customers about liability limits, it used to be the old norm was $1 million limit of liability was sufficient in the marketplace. I don’t think that’s true anymore and we’re seeing that from our carriers telling us that awards are higher than they ever have been before.

Josh: There’s more social injustice out there, there’s more billionaires than there haven’t been before. So when a jury is sitting there of their peers and they’re saying someone did something wrong, $1 million doesn’t really have that same, “You did something wrong.” Now it’s like 10 million, 20 million. So it’s increasing the overall stage of what that overall cost is, which unfortunately does go back to insurance. Insurance usually is there to help them with that piece in that defense. So those costs are starting to creep up a little bit because the awards are coming up a little bit.

Rich: You were talking a little bit about the whole idea of social inflation. You and I had had a conversation offline. It was more about how a lot of times people are going first to sue before they do anything else because of this feeling that wrongs must be righted it. Is that an ongoing trend and how big a deal is this?

Josh: It’s something that we’re monitoring there closely and it’s something else that we’ve learned recently since that conversation too, is that there’s more litigation funding than ever we’ve seen before or even heard about, and so …

Rich: What does that mean? Litigation funding.

Josh: So what we’ve been told, it’s a growing trend and for those who can’t afford suits, there is investors out there that will help pre-fund that. And so where, where someone may have not decided to go then to that type of suit or a class action suit, they may receive a phone call from an investor who may try to help them with that process. And instead of going for a quick, easy type of settlement, which would move things along quickly, they’re wanting the companies to not settle.

Rich: They’re looking for the visibility and that’s what’s driving up the cost.

Josh: Exactly.

Rich: Because they’re looking to make change and it seems to them that the best route to do it is through a protracted court case that’s going to end up on the front page of the New York Times or on Fox News or something.

Josh: Unfortunately.

Yury: It feels like a marketplace of discontent.

Josh: Oh, I like that Yury.

Yury: Right? Like it’s intentional and there is a kind of like a reward that the end of it, but we’re going to be very intentional trying to screw someone up.

Rich: Well I just saw the other day that there was a vegan who was suing Burger King because the Impossible Burger is cooked on the same fryer as the meat burgers. And although I can understand if you’re a vegan, why that would be troubling at the same time, they never say it’s actually a vegan burger. We have a vegan in the room, I’m not really sure if he was going to weigh in on this.

Josh: So I guess in that respect, what I would say is that we spend more time working with our current customers to make sure that we have a good understanding about what they’re doing, how they’re doing it, what marketplace they’re going into. And we have more discussions I think than we ever had before.

Rich: Are you seeing in certain industries that social inflation is either a bigger deal? Or it looks like it’s going to be a bigger deal, so then all of a sudden in certain industries you’ve got to carry more insurance?

Josh: It’s a really good question. I don’t know if I have the direct answer for that and I think it’s kind of a wait-and-see type of thing. We’re seeing some price increases overall from an insurance standpoint for … Are you familiar with the term umbrellas? And umbrellas is a type of insurance product. It adds excess layers of coverage over what you have for current policy limits. So if you have general liability limit of a million, you have an auto limit of a million, an umbrella sits on top and actually increases those limits to 2 million if you have a million dollar umbrella. Okay? So the cost of the umbrella prices is going up. I would say on average, 10 to 20% in some, in some areas. Some areas are staying flat and they’re taking … Insurance carriers are taking an overall rate because of the cost of the expectation is that it’s probably going to pierce beyond the million dollar limit on the underlying and go to that extra umbrella.

Yury: So how much liability should a typical business be carrying?

Josh: So it’s a really good question Yury, and a lot of it is I’m sitting down with their trusted advisor insurance to have that conversation. When it comes to liability and the types of products that are about available to different industries there’s a range that folks can look at. You wouldn’t want to start with I think anything less if you’re in a business less than a million-dollar-limit per occurrence. And depending on the type of industry you’re in, sometimes you can get an extra 2 million for not a lot of money. And when I say not a lot of money, if you’re looking at an umbrella policy that may cost the much between 500 and a thousand dollars a year.

Josh: Some products allow you to buy an extra million dollar limit on top of what you have for million for maybe a hundred dollars a year. So it’s working with your agent, talking about the industry that you’re in and making sure that they’re giving you options to consider. Options are really helpful so that when you have that conversation with someone and says, “Oh, well I didn’t know I couldn’t have an extra million dollar for $100 I would have bought that.” We really want to make sure that that understanding is done up front, because we want the coverage to take place. We want them to be covered. That’s our goal. We want everyone to make sure that at the end of the day, the product works exactly how it should be.

Rich: I’m thinking about, you and I were at an event yesterday and you were talking a little bit about insurance for cyber crimes, around cybersecurity. These are new things that are coming up and I guess, as a business owner do I need to suddenly go out and get cybersecurity? Obviously I’m sure that different businesses need to cover different types of insurance. My company doesn’t have any cars. All the employees drive to work. My insurance will probably would be different if I say own a snow removal company or something like that. But does as new things come on, do our general insurances, business insurance cover these things? Or do we just need to continually stay on top of these sorts of things?

Josh: It’s a really good question. Some companies will add some limited coverage on us as an endorsement policy going forward. Case in point, I write a lot of apartment buildings in the city and some of our mutual companies have decided, well let’s add a little bit of cyber liability coverage, like which you was talking about. And when a little bit of coverages like maybe 50,000 maybe a hundred thousand and that’s an industry that may or may not have a large exposure as opposed to a bank who has personal records of so many customers. So many vendors, right?

Rich: Or hospitals, right?

Josh: Or hospitals, lawyers, insurance agencies, insurance companies. So anyone who has more personal identifiable information of others. And it’s an evolving type of science to choose, stay in front of. And so what we always like to do is just give updates to our customers and make sure they’re aware of the process, make sure they are aware that there’s an option that you could have this, there’s an application potentially you have to go through. But on average we like to give them a range of a cost. Did you know that you could have this for 500 to $2,000 a year? And here are some of the things why you should have it for.

Josh: We learned so much from claims that we have with our current customers or from claims that we hear from our carriers. We share those stories because stories really help us best understand what’s happened in the marketplace and what’s happened to others. And if we share those stories loud enough, potentially it may settle in so that someone may consider that, “Well, geez, I don’t want that to happen to me. Maybe I should find that coverage.” Or, “How much does that coverage really cost?” Or, “I should really look into that.”

Yury: Before we get into the costs of insurance, is there anything that the business owner can do to actually drive the cost to be down? Like trainings, seminars, anything like that?

Josh: That’s a great point Yury. I mean we look at that insurance as the last piece of defense. Okay. Risk management is the first line of defense. Good practices, good policies and procedures. Having a very strong IT department, having a strong vendor that does that work for you. When we talk about applications, there’s a lot of questions you have to answer to go through the process of actually getting insurance. A lot of things they’re asking for is what risk management procedures and policies do you have in place currently? I think that’s the reason why I think we’re a little bit different in the marketplace and maybe some of our competitors is that we actually have a full time risk manager who works on site with us. So we’ve had one for the past 10 years and one retired and now we have a new person who works with us named Tim McCarty.

Josh: Tim is an excellent resource for our customers. So for instance, it could be driver training, it could be offering training with regards to premises liability, slip and falls, what kind of policies, procedures are in place before something would have happened. And then what policy and procedures are in place after an accident may have happened too. There’s a lot of documentation that’s important to have, but it’s also has to be something that’s workable. So that for instance, if a claim does happen, there’s something set out in line so that it’s not just everyone gets panicked when there was an incident. I had a fire in a four-unit apartment building a couple of weeks ago and it’s jarring. It’s a very difficult process to work through but to be there for your customer, help them walk through the process, have working knowledge of next steps, how to get the adjusters there, who does what, what does goes where. Makes everyone feel more at ease at that process. And so risk management does a lot of that upfront.

Yury: Risk management govern this process, policies, procedures, all that stuff. That’s basically the bundle of things that you need to be considering before purchasing. Right?

Josh: A lot of the time, and it’s a lot of things that gets put off. Maybe it isn’t the first priority for a company. And from an insurance standpoint, we know where we sit, it’s an expense to the bottom line and our job is to keep those expenses as low as possible and provide the best coverage that we can provide to our customers. Risk management is another form to help protect that insurance policy. The best form of protection is to have risk management and the risk management portion of that is the way for us to keep costs in line. Our goal if possible, is to have a very flat line insurance throughout the years.

Josh: We don’t like spikes. It’s inconsistent. I think it’s very hard to budget with and we want to make sure that we’re forecasting in advance if that’s the case. One thing that we brought over from when I was in underwriter from a workers’ compensation carrier is forecasting a safety rating. So as employees get injured on the job and if you’re a large enough employer that pays enough premiums, you’ll get actually a rating that determines are you on average, higher or lower than your peers. And that’s either a detriment or it’s a credit to your policy. We like to make sure that our customers are familiar with that process. They understand the process and we give them something six months before that process even happens so that they can think about, “Hey, if our claims are adding up and it’s going to be driving up our costs, we want to be able to forecast that out for them six months in advance so they can budget for it.”

Josh: Otherwise, it can come too much of a shock and it’s very hard for companies to deal with that at the last minute.

Yury: So basically if you don’t anticipate that it can cripple you in the moment when it happens. Right?

Rich: I guess the one point I’m not clear on is these things like risk management and doing training with your staff or whatever it might be. Do these directly or indirectly lower your costs? Indirectly maybe they do because people don’t make stupid mistakes that you then have to have insurance claims on, but can you take certain types of trainings with your staff and suddenly you get a lower rate because of that?

Yury: Or a discount or something?

Josh: Yes and no, because it’s an indirect most of the time, because training is never perfect. Right? And, but if anything, like if we’re doing driver training, we all could have better results from driver training. We all could make mistakes at the same point too. Like case and point, we’ve had some hit and runs that have occurred. Those are going to show up on an on a claim forecast, but it’s not something that we could control necessarily because those are hit and runs.

Rich: Sure.

Josh: Directly. There are positive influences out there. When we do a training for a company and we have an employee list and employees sign it that they have been attending to it, and then we send that to the insurance underwriter for that company. And the insurance underwriter opens it up and says, “What is this? This is amazing. Well, I didn’t ask for this.” And you’re like, “I know this is a company … This is proving that the company that you have as a customer is really dedicated to risk management.”

Rich: And therefore lower risk don’t need you to write it much.

Josh: Right.

Rich: One of the things that I’ve seen happen over the past 10, 15 years is many more people working from home, either on a regular basis or just having flex time, whatever it is. Does businesses insurance tend to cover people when they’re working from home? Or is it only when they’re in the office or physically on the job moving from place to place?

Josh: Insurance covers them while they’re working from home. So the liability if they’re working on the company. So once they clock in, the liability then begins. So, what’s if they’ll be working from home doing something for say you’re a company and they’re working for customers, the liabilities there for them. Seemingly also too the worker’s compensation is there for them as well. And one thing workers’ compensation is important to know about from working from home standpoint is that the employer has a good opportunity there to work with their staff to help make sure that they have a comfortable ergonomically safe desk or environment to work within. Okay?

Josh: Because if someone does develop carpal tunnel syndrome or someone does get injured at home on the job, that is a workers’ compensation claim that the state does require you to have and provide coverage for, for those employees.

Yury: That’s good to know. That’s something that, that’s a good heads up. Josh, I wanted to ask you a little bit about the social engineering. What can you tell us about it? And can it get a business owner in trouble?

Josh: Yes. Again, that’s a really good … So we’re talking about social engineering from a cyber liability standpoint. So eCrime or electronic crime. It’s unfortunate and it’s happening more and more. In fact, I routinely get an email from my boss while I’m working at the office and says, “Can you go out and pick up some gift cards-

Yury: Gift cards.

Josh: … and bring those back to me.” And, or, “Bring and drop off them somewhere.” And I’m like, “Yeah, that’s not him writing that email for sure.”

Yury: But seems legit.

Rich: Seems sketchy.

Josh: So we’re seeing things like social engineering fraud and social engineering fraud is the scenario of someone falsely representing someone else, asking them to do something like transfer money out of an account. Or we’ve also seen things called reverse engineering fraud. Reverse engineering fraud is kind of a newer type of engineering fraud where they’ll develop an invoice from the company, these hacks or hackers or perpetrators. And they’ll send the invoice out to a client of the customer seemingly saying, “Oh, this looks legit, pay this.” And it actually pays the hacker instead of the company. And so are so the company is like, “Well, I didn’t get that payment.” And look yeah the customer’s like, “Well, I paid it to you.”

Josh: “Well, I didn’t get that money. Oh God, what happened?” And what happened from that, from that standpoint. So there are more solutions than there used to be from this type of scenario that used to be a no coverage for this probably three or four years ago. And so we’re seeing insurance kind of pick up the pieces to kind of help with that.

Rich: That exact scenario happened to friends of mine who run a business where their system was hacked, sent out an email. I want to say it was like $80,000 and the rough spot here is that these people have been working together for years and they’re friendly, but they’re like, “But you need to pay us.” And then it’s like, “Well, but we did.” And both insurance companies in this particular case are saying like, “Well yeah, you had cybersecurity but no money was taken out.” So both sides are saying, “No, it’s the other side’s fault.” And now they’re in litigation over it. And it’s really unfortunate that a business relationship was ruined because of that. Or potentially ruined because of that. They’re suing the other side’s insurance company to get the money but who knows how that’s going to end up.

Josh: Yeah, it’s fortunate training is helpful and we hear it from some of our IT professionals in the area who can help with that type of scenario to, “Hey, does this email look legit to look at the header of the actual email address? Is it coming from this actual person or is it …”

Rich: Because it might say Rich Brooks it’s from, and then you look at email address and it’s like [email protected] so some of this just comes down to you got [crosstalk 00:24:54]. You got to educate your team. I know as a business owner Josh, that I would love to put as much of this insurance on autopilot and never have to think of it, but what ultimately is my responsibility when it comes to coverage and insurance? What do I need to feel responsible for if I’m adulting as a business owner?

Josh: I think it’s good to have an annual checkup. Like, if you go to the doctor every year to do a checkup or physical, give a physical to your insurance policy, if it’s a set and forget it mentality, the companies could be issuing exclusions on the policy. You may not be aware of. There could be changes with, with the ISO forms which are continuing to evolve. And it could be something on there that you may not have coverage for that you thought you did. Or something that could be on there by accident. And case in point, I have helped some customers before, nonprofits and had some an exclusion on the policy that limited the coverage to a designated premise. And I’m like, “Do you do all your operations out of just your office?” And they’re like, “No, gosh. We rent space, a variety of locations throughout Portland.”

Josh: I’m like, “Well this endorsement is unfortunately limiting coverage to just your office so you don’t have coverage if you go rent out in the space in a place else.” And I said, “I think that’s probably not what you intended. And it’s quite damaging. In fact, I think we need to move on something quickly and and find a solution to that.” Which we did. And so I hesitate to say anything I said forget it anymore.

Rich: Makes sense.

Yury: Josh, we are at the point where we have this, well monumental question that we ask all of our guests, so I hope you’re prepared for it. I’m sure you are. So the question is, if you could change one thing to improve the business ecosystem in the State of Maine, what would it be?

Josh: It’s a really, really good question and I’ve thought about this from a couple different angles and my take on that from an insurance standpoint would be that drive for other people. All right. I think what we’ve got away from is how being a helpful driver for others, using your blinker, stopping at a stop light, letting people walk through the crosswalk, maybe letting someone go ahead of you so that they’re not angered and trying to race out at the same time you’re trying to move at the same time. Those small little things I think can really pick up the entire community. And we all are busy. We all have variety of things we’re trying to get to. If we can all make it so that everyone can arrive safely without injury, I think we can do so much more for the community at large.

Yury: That’s fantastic advice. Thank you.

Rich: Thanks Josh. You’re working at Clark Insurance. Where can we find more information about Clark Insurance online? And where can people connect with you online?

Josh: So our website, clarkinsurance.com. I’m also on LinkedIn and you can find me on LinkedIn or you can come visit us. Insurance agencies are more retail based than not. And so our headquarters is in Portland and we’re located next to the Elks and that’s right across the street from the Portland Jetport entrance. And so we have a wonderful new building that we have there, that’s been almost a year and a half. So we’d welcome to come in and talk about insurance there. We also have some branch offices and in Gorham and Wyndham and Saco who are wonderful and they help a lot with the personal lines customers. We also have a couple of different offices outside of the state of Maine as well in New Hampshire and Massachusetts.

Rich: Awesome. And do they let you park at the office when you’re going on a family vacation and just take an Uber across the street?

Josh: You and I can talk offline.

Rich: All right, sounds good, Josh it’s been great. Thank you so much.

Josh: Thank you very much, gentlemen.

Yury: Thank you for coming.