Pub. 14 2015-2016 Issue 1

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 21 new jersey auto retailer W W W . N J C A R . O R G Another impact has been higher business income premiums and a greater reluctance on the part of some insurers to offer coverage for off-premises business income. In some ways the insurance market in New Jersey is a tale of two states. Insurance underwriters have a tendency to treat dealerships in northern New Jersey the same way they treat dealerships in New York City, while southern New Jersey is treated more like rural Pennsylvania. That said, the dealership insurance market in New Jersey remains vigorous. There have been some changes that may ultimately impact the dealership insurance landscape. We have seen at least one regional insurer pull away from writing and renewing deal- ership coverage. One auto inventory insurer has recently begun to refuse to write or renew inventory coverage alone, without insuring the rest of the garage insurance package. Another auto inventory insurer is being acquired by a larger insurer. Last but not least, one of the smaller national garage insurers is also be- ing acquired. What changes these acquisitions and underwriting changes will bring, remain to be seen, but they will create turmoil and uncertainty for some. Over the past couple of months, the outcomes for dealers bidding their coverage has changed a bit. First and foremost, average rate increases have become much smaller and, in a few cases, deal- ers are even paying less than last year. Second, for dealerships with excellent loss experience, insurers are much more likely to negotiate, but only if they think you have other better options. This means that you must seek other bids so your insurer feels the competition. Also, for dealerships with a coastal exposure, we are seeing some carriers be more willing than others to offer reasonable coverage and at a reasonable price. Once losses from Sandy and Irene are no longer part of your reported loss experi- ence, the market will begin to improve, albeit slowly. We have seen the same incremental improvement in recent years along the Gulf and southeast coast. As the insurance market continues to improve, you will not hear a lot about it until the improvement is old news. Don’t expect your representative, agent or broker to run in next week and tell you he/she can cut your premiums, even if they can. When markets begin to soften, insurers are quiet so they don’t have to cut premiums any more than is necessary to keep your business. Don’t be surprised if your agent, next time around, comes in and tells you that your premium increase will be minimal or non- existent, therefore there is no need to bid your coverage. This is just a ploy to keep you from finding out that other insurers may be even more competitive with both price and coverage. If you passively sit on the sideline waiting for the bad news, you have just played into their hand. Therefore, to take advantage of this improving climate you must bid your coverage so you can see all your options. Competition is a beautiful thing. The rules for successful bidding are still pretty much the same as they have always been. Start your bid process about 90 days out. Be sure you have reviewed your loss runs for accuracy. Give explanations of large or frequent losses and what you have done to remedy the situation. Contact as many bidders as possible, even if it is just two or three, and be prepared to analyze the coverages as well as the costs. If you follow this advice, you will be in a position to benefit from an improving insurance market long before it hits the news. Every dollar saved is a dollar of profit! Roger Beery is President of Austin Consulting Group, Inc. He can be reached at 720.528.8900, x11. As the insurance market continues to improve, you will not hear a lot about it until the improvement is old news.