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Guest Room: Brian Higgins on the Insurance Impasse

The rising cost of insurance coverage is a hot-button topic for party rental operators fighting for business in today's tough market. To find out what's behind the rise in rates and — more important — what can be done about it, Special Events Magazine interviews Brian Higgins, a broker with 15 years' experience serving general and party rental clients. Higgins is vice president of sales for New York-based Kaye Insurance Associates, a preferred agent for the American Rental Association.

SPECIAL EVENTS MAGAZINE: Is the hike in insurance rates hitting party rental specifically or other industries as well?

BRIAN HIGGINS: Commercial insurance rates have been increasing across the board for the past few years. The insurance carriers are limiting coverage where they can and increasing deductibles to lessen their exposure. Even with all the increases, the rates in the rental industry are about the same as they were five years ago, and less than they were 10 to 12 years ago.

Q: What lines are going up the most for party rental? Is this consistent across the industry, or does it vary by region?

A: All lines have been increasing, with inland marine {an insurance industry term for coverage of mobile property, which includes tents, chairs, tables, etc.} and auto coverage leading the way. Workers' compensation has become a tough class, especially in California.

Q: What is behind the increase in rates? Is it the aftermath of 9/11, the lousy stock market for insurance company investments, poor underwriting, etc.?

A: The increase in rates can be attributed to all of the items you mention. Insurance rates in the late '90s were very soft. The companies didn't collect enough premium to pay for future losses, and with interest rates so low, they are not getting much of a return on their investment. This puts pressure on them to make money on the underwriting side, so they've had to raise rates to do this. It's part of the cycle that takes place every seven to 10 years or so.

Q: What are the aspects of party rental operations that insurance companies consider particularly risky?

A: The two main areas where I see claims are on inland marine and auto coverage. Tents are susceptible to wind damage, and the claims can get expensive. Auto-related claims occur because of the delivery exposure in the party rental industry. An area I might consider risky is inflatables. As this area develops, the risk will increase because of the new products entering the market. It's not just moon bounces anymore.

Q: The American Rental Association has begun offering its Certified Event Rental Professional training program, which is aimed at boosting the professional skills of party rental employees. Is the program paying off for insureds?

A: I think the CERP training program is a great tool, but it doesn't have a direct effect on lower insurance premiums. I find that companies with strong management tend to have fewer claims, and that transfers into lower premiums. The more training you get and the better you become at your profession are the keys. So I would say that the CERP training helps indirectly.

Q: What mistakes do you see your party rental clients make most often?

A: I hear about companies that try to take on too much and end up in over their heads. What I mean is that they will put themselves in a compromising position by under-pricing a job, going beyond their geographic area, or taking on too many jobs, so the employees become fatigued and make mistakes. Many claims could be prevented if people would just slow down and look at the cause and effect of their actions.

Q: What advice are you giving your party rental clients?

A: I advise my clients to be active in associations such as ARA and the local tent rental associations. The training and information that you can receive from others in the industry is priceless. From an insurance standpoint, anything you can do to reduce losses is helpful in today's market. Increased deductibles, checking drivers' records and meeting with your staff regularly are all good ways to do this.

Brian Higgins can be reached at 973/835-8439 or via e-mail at [email protected].

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