Masonry Magazine April 1992 Page. 15
Claims Made Versus
Occurrence Forms
Many traditional liability insurance coverages are being revised from the usual "occurrence" to "claims made" forms. It's important to distinguish between the coverage impact of these two forms and how you might be affected.
CONTRACTORS should be aware that many traditional liability insurance coverages are being revised from the usual "occurrence" to "claims made" forms. The new Comprehensive General Liability Insurance policy (CGL), soon to replace the CGL in use, has been promulgated in several versions, one of which is a "claims made" form. Other liability insurance coverages have made this transition.
What does this portend for contractors? It is important to distinguish between the coverage impact of these two forms and to make sure contractors understand how they might be affected.
The "occurrence" form, which has been with us for a number of years, means that the liability policy in effect at the time a covered loss occurs covers that loss, irrespective of when the claim is brought or when the settlement with the insured occurs. Stated differently, if a contractor is provided with notice of a loss in 1991 for which the contractor is liable and which loss occurred in 1987, the liability policy in force in 1987 will respond to the loss.
The newer "claims-made form states that the policy in effect at the time written notice of a claim is filed responds to the loss, irrespective of when the incident causing the loss occurred. Using the facts above, the liability coverage in effect in 1991 would respond to the 1987 loss, because the time of reporting the loss controls, rather than the time the loss causing incident occurred.
Contractors should know this change causes some problems which need careful consideration. For example, some liability policies written on a "claims made" basis contain a retroactive date. This date allows the current policy to respond to acts that occurred prior to its inception and after the retroactive date if the acts are reported during the current policy period. This provision is standard in professional liability policies. The proposed new CGL. policy probably will not have a retroactive date, which means full coverage for any prior acts is provided if the claims are made in the current policy period. Another feature of importance is the extended reporting period used in "claims made" policies. As long as a contractor continues to purchase liability insurance from the same insurer, such continuous coverage will provide a vehicle for claims as they
Which First-Strategic
or Market Planning?
AT SOME POINT IN THE life cycle of most companies, a formal planning process is instituted to focus management's attention and establish goals for the organization. This is most commonly called a strategic planning process-strategic because the process focuses on external developments and results in longterm strategies to change the company and align it with the changing environment.
Of all the questions that could be raised during the strategic planning process, three must be answered: "What will we do?," "Whom will we do it for?" and "Where will we do it?"
These are fundamental marketing questions, and they lead companies that are significantly marketing driven to ask, "Which should we do first, strategic planning or marketing planning?" The answer is: neither.
The strategic planning process and the marketing planning process are not two distinct processes, although they may result in two different plans. To embark on a strategic planning session without having accomplished some significant amount of marketing planning such as research or analysis will result in a loss of reality: plans made for markets that existed yesterday, strategies developed for less profitable work, tactics to promote perceived strengths that customers couldn't care less about.
You might as well plan your vacation wardrobe without considering the weather.
At the same time, the marketing planning process depends heavily upon the strategic decisions made by management to be responsive to the longterm requirements of the company. Although the marketing staff provides significant input, it's not their place to decide who, what and where. It is their place to decide how, the tactics to use to implement the goals and strategic decisions of management. To do market planning without some understanding of management's longterm goals brings to mind what the Cheshire Cat said to Alice: If you don't know where you're going, any road will get you there. Plan all you want, but if you don't understand where you want to go, you'll never know where you want to be. FMI Corporation is the nation's largest management firm exclusively serving the construction industry. Their offices are located at 5151 Glenwood Avenue, Raleigh, North Carolina 27622. Phone 919/787-8400.