Larry Harb of IT Risk Managers, Inc. joins us to discuss the challenges of insuring auctioneers, and what he’s seeing during the COVID-19 pandemic.
About this segment of Blackbird TV
Recorded: December 9, 2020
Published: January 12, 2021
Joining me today on Blackbird TV… this is Larry Harb from IT Risk Managers in Okemos Michigan. Hi, Larry. Hi, David. It’s a pleasure to be here thanks for having us, thanks for having me. I’d like to ask you when you and I met it was 10 years ago, I was starting Blackbird Asset Services—we’re an auction company—and one of the things on the checklist is get insurance when you open your company. It’s not a big deal so I called some local brokers, I called some people. My insurance guy. And nobody would touch me. I couldn’t insure this business for the life of me. And then I found Larry. Larry, talk to me about why is it so hard for auction companies and auctioneers to get insurance. Well David, you’d be amazed at how many auctioneers actually asked me that question and don’t understand it, but it’s actually very simple from the insurance company’s perspective. Auctioneers are considered a high-risk class now, everybody says “why is that?” Well, just think about it logically. If we were talking about—let’s say insuring a fast food restaurant—let’s just pick on the arches, the golden arch guys, okay it doesn’t matter whether I’m in Upstate New York, whether you’re in Okemos Michigan or whether you’re in Orlando Florida or Santa Barbara California. Every McDonald’s is going to look the same. They build them to look the same, their playbook looks the same, the equipment is all the same, so when you onboard an employee and do new hires, it’s all the same the playbook is identical it’s super easy to quantify that risk for the insurance company. Oh totally, and that’s the issue when you think about an auction business. Even with the franchises, there’s nothing similar except they all use the auction method or marketing to establish the price and that’s because the issue okay there’s nothing similar so in the morning you could be doing box lots, in the afternoon you could be selling equipment or a piece of real estate, in the evening you could be doing a boat or an airplane—and I’ve got auctioneers to do just exactly that and that becomes the issue the insurance company never knows what their exposure is and that’s why it’s so difficult to insure auctioneers and that’s why you’re out there because you’ve got some really really good places to place companies, and I know we were a challenge because we specialize in commercial and industrial, and we’re in New York — and you’re in new york — so we could make a whole segment about that too but you were really there at the right time and and you’ve taught me so much about about the insurance industry and you’ve taught me so much about about risk and and and cyber risks and you know we could go on for hours about this and i don’t want to make it that long. I wanted to to kind of segue into where we are right now this is being recorded in in December of 2020, and we’re in the second wave of the COVID pandemic and I’d like your opinion on how this pandemic impacts the insurance industry and what do you see happening? Wow I mean that’s where you got to start you got to start with a “wow.” When you look at 2020 and what 2020 has done for the insurance industry the biggest problem we’ve had is everything is a catastrophic event we’re talking about a pandemic which is a catastrophic event it’s the worst event anybody’s ever seen you know all you got to do is turn on the news media and you hear it 24 / 7. Yeah they tell you all about it right let’s look at the other events that have impacted 2020 and the the impact on the insurance industry is it’s all on the insurance industry’s bottom line now covet has been a big problem for the insurance industry now while the insurance industry is not paying business and eruption losses for the most part they’re paying huge workers comp claims we’re seeing a number of workers comps claims come in because of COVID and that has just raised rates and and that’s what we’re seeing happening in the insurance industry you’re seeing rates going up because of the events that have taken place whether it’s covid whether it’s the wildfires out in california or colorado but out west you’ve got all the wildfires going on and then you add to that the hurricane season that we’ve just come through, we’ve had more named hurricanes this season than any other season on record they ran out of of two alphabets out of two alphabets right so so when you think of all of those events whether it’s the pandemic whether it’s the hurricanes whether it’s the wildfires all of this is created nothing but losses for the insurance industry and consequently I’ve been in the insurance industry for over 30 years and this is one of the first times in 30 years where I could say the market is really starting to harden up considerably and what do I mean by that it’s getting harder to find coverage for accounts it’s getting more expensive for accounts and you’re seeing less coverage being offered insurance companies use this kind of opportunity to raise rates and start making some profits back because they’re really their bottom lines are really suffering wow nothing but good news on this one sorry “so, other than that Mrs. Lincoln how was the play at Ford Theater?” have you seen the major league baseball suit against their insurance carriers for for loss of revenue from COVID? Are you familiar with that action? Truthfully David I really haven’t followed it but in reading all of the different insurance magazines so far the insurance companies are winning the business interruption suits that are being filed against them because of covet wow so so the state shuts down the restaurant i can’t hold auction sales and that is very clearly an interruption in business but our insurance carriers aren’t going to compensate us for that they’re not and and you’ve got to ask yourself why because from you yeah because well from from your perspective you’ve lost income absolutely from your standpoint it’s definitely a claim but from the insurance companies perspective you have to ask yourself what triggered the claim in the general liability policy which is where business interruption is usually found that coverage is triggered by bodily injury and or property damage and we don’t have either one of those with a virus do we that’s exactly correct you don’t it hasn’t happened the trigger hasn’t happened therefore the insurance companies have denied that claim i believe that in the uh major league baseball suit they’re claiming that there’s property damage to their stadiums and they couldn’t put fans in the seats and i think that’s the basis for their suit so it’ll be interesting to see how that plays out we’ll pay attention to it if anybody has any questions about about any insurance issues i’ll tell you what this guy on the screen is is probably the best guy in the industry to answer your questions and we’re going to put his name up in just a minute on the on the panel at the end and Larry I can’t thank you enough for spending your time with me today have a great day and thanks for being part of Blackbird TV. Thanks, David, it’s a pleasure to be here.