Consolidating separate legal entities' loss experience to develop a common experience modification factor has the potential to cause confusion for the client, the agent, and sometimes the insurance carrier.
Clients may view such mixing of loss experience due simply to common majority ownership as less than reasonable, especially if the commonly-owned entities substantially differ with regard to the relative hazard presented.
Agents and underwriters may not realize that combinability is present, and you may only get a glimpse of the need to combine entities at the time of the audit.
How many different ways "majority interest" can be created; and
How to map "combinable" entities.
The idea of combinability seems rather simple, the mechanism of combinability can be rather complex. Who is combinable? How many ways is "majority interest" created? Who should make the final decision regarding combinability? These are questions for which many in the insurance industry really don't have an answer (or not the correct answer).
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Featured Book
The purpose, processes, and intricacies of business income coverage
Business Income Insurance Demystified
The Simplified Guide to Understanding Business Income Coverage This book walks you through the basics of business income, details and simultaneously simplifies the business income report/worksheet (the form that scares those who have not read this book), teaches you what is required to calculate the period of restoration and coinsurance percentage (these are actually related), clarifies coverage provisions contained in the loss determination section, discusses dependent property exposures and coverage, presents the three non-coinsurance options, and expounds on extra expense coverage.
In addition, the book provides a business income checklist and guides you step-by-step through the business income application.
The idea of combinability seems rather simple, the mechanism of combinability can be rather complex. Who is combinable? How many ways is "majority interest" created? Who should make the final decision regarding combinability?
Instructed by: Chris Boggs Date: Thursday, April 18 Time: 10:30am PT / 1:30pm ET Length: 1 hour
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