Email

Transcript of Bob Roth's Interview on the
TDavid Internet Radio Show
Regarding Internet Insurance

Internet insurance, webmaster insurance on internet radio. What better place to find and hear about the special needs of internet ventures and webmaster insurance needs?

Known on the boards as Bomar, Bob Roth, CPCU, is webmaster of this site and an expert on high risk liability of all types, and internet insurance and liability in particular. We now insure and/or advise and consult with some of the biggest names on the internet today. The following is a transcript of Bob's interview on the TDavid Internet Radio Show.

Q. To begin with, you mentioned two different urls our listeners can go to?

A. Yes. First of all www.insurancestop.com/needs.html will give listeners an outline of the type of coverage they should be looking at for any type of business, but especially for a web-based business.

Secondly, www.insurancestop.com is the index page to my entire site, and they can surf around to see if they are interested in any other type of insurance.

But if they go to needs.html, they will see the things which are specifically designed for internet broadcasting/webmasters.


Q. What's the real name of this type of insurance? It's not really Webmaster General Liability Insurance, right???

A. It's now called multimedia liability insurance. We dovetailed it with a normal general liability policy so that we have all the coverages in force that you need for an operation. The general liability policy will give you the normal slip and fall thing you might get into, the normal off-premises operations as if you were attending a trade show. It will give you a variety of different things. One of the things it will do is give you defense on some of these things you might run into in an internet multimedia liability policy. Therefore the general liability carrier wants to know that you have the other liability coverage in force so he doesn't get brought into something that he doesn't want to be involved in. There are a lot of different coverages, but I think the one you're most interested in right now to start off this discussion is the internet multimedia liability policy.


Q. If our listeners were to go to their local insurance agent, should they ask about internet multimedia liability insurance?

A. If they do, chances are they'll get a blank stare.


Q. Tell us, what's the difference between a broker and an agent, and what type of agent would be able to place a risk like this?

A. Most of us are both brokers and agents, depending on the situation. Sometimes it's a gray area, and we walk a fine line between the two designations. But the legal definition is that an agent is a representative of an insurance company. He has the right to bind the insurance company to risks, and his job is more to protect interests of the insurance company, and to represent that company to the insured.

A broker is just the opposite. A broker works to represent the interests of the customer, and does not represent the company directly. He has a different type of contract with the insurance company, or companies, and therefore does not have binding approval, so he normally has to get approval on the risk before he can place the coverage.

I have both licenses, and I work in both capacities. I normally work as a broker, representing the interests of my customers, and represent the customers to the insurance company, and not vice versa. And I do this normally for a fee. I like to ask for net quotes, in other words, quotes with no commission on them from the insurance companies. That way I know that I can wangle the absolute best deal because I always go to my customers ahead of time and tell them, "This is what I work for, this is what I make, and I'll go out and do the job for you if you agree to pay me this percentage."


Q. So you're working on a full-disclosure basis on this then? You fully disclose commissions, etc. to the customer?

A. Yes, I do. I'm not bashful about telling any businessman what I need to do to represent them appropriately. I need to gross about 18% overall on an account, and I'm not shy about telling them that. You know, we have to pay rent, we have to pay people's salaries, we have to pay all types of things... insurance on our own, workers' comp, general liability, malpractice, and all the other things that every other company is involved in, as well as taxes, etc. And out of that, if I gross about 18% across the board, I'll get 2 or 3 points out of it bottom line for me and that's what we're really talking about, and I think you'll find that's fair.

Basically, the rates vary by line. As you know, on workers' compensation, we will normally get paid a smaller amount, and you don't need as much. I may charge a customer 20% on property and liability, 10% on the workers' comp, and as you know, group insurance can go way down depending upon the size of the risk... that can go down to 1 or 2% for us. I'm not bashful... I'm very much up front. I want my customer to know what my expenses are going to be and what my cost is going to be, and literally what he can expect as a fee for the services that he is going to receive.


Q. Are we as agents and/or brokers most concerned about commissions or about the customer?

A. It's really a two-part question. What about large commissions, and do we really care?

I think the large commission and the bad connotations that go with it are from a certain segment of the life insurance industry. As you know, they pay very, very large first-year commissions, and almost nothing thereafter. They expect almost no service to the client until many years down the line when there is a claim. These people are in it for the quick dollar -- they go in, they hammer, and they are closers. Their problem is to sell that product and move on to the next one.

Conversely, people like you and I who are primarily in the property and casualty business, make smaller commissions, as I just said. The maximum I ever get is somewhere in the realm of 20%, and I need this. I'm going to be providing a continual service during the year. It's a little different situation. This is not a huge commission. Take a comparable industry, which is a law firm. A 50-60% contingency fee is not unheard of... this is a normal thing in their business. It's a very parallel industry. They go to court, you and I go out and talk to customers. A lot of paperwork is generated, a lot of paperwork goes back and forth by our clerical office staff. We do it for 17 or 18% overall gross, and they do it for 50 or 60% overall gross.


Q. Do you give every single discount that's available to an account? I've had situations where I might say to underwriting that we'll see how it goes the first year....

A. I negotiate hard, but it has to be a good deal for both parties or it falls apart. There are a lot of factors involved, as you know. One of them is the reputation of the agent and the loss ratio of the agent. If an agent is continually running a 200% loss ratio, he's not going to get a better price than someone who's running a 40% loss ratio. It's just not going to happen because the underwriters can almost look at this guy and say, "...if it's coming in from him we're probably going to have more losses than if it came in from someone else." So that's a factor, and people should be aware of that. It's actually more true on the brokerage end where I work than on the agency end, but I know it affects every single aspect of the business.


Q. Do all insurance companies negotiate?

A. That depends upon the insurance company. I can negotiate, and I can negotiate heavily, based on information about the insured. I can't go to an underwriter and say, "This looks high and I need something lower." I have to say, "Yes that looks good and it looks like the correct premium for the risk, but based on this information, why don't you reassess it?" That I can do... that's negotiation. That's something I can do when there's enough money involved. I don't do it on a small account, but when you start talking real money, and you know your risk and you know your business, you can get in there and say, "Take a look at this. I think you can probably give him a few more credits based on the fact that he does this, this, and this to protect your interest and theirs."

Next Page of Interview

More

Commercial Insurance

Email Us