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Equipment Breakdown 2

Broker Presentation
by

Scott McRiner

on 12 March 2013

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Transcript of Equipment Breakdown 2

The Business Opportunity Highlight a business opportunity
Examine property exclusions to understand EBI coverage need
Demonstrate coverage through claims The Business Opportunity
99.9% of all our customer require Equipment Breakdown Coverage
The business opportunity is that less than 30% have this coverage Why do 99.9% of Risks RequireEquipment Breakdown Coverage?





Where there is electricity there is an exposure to arcing
How many customers do you have that do not use electricity? Is Coverage for Electrical Arcing Provided Under a Standard Property Policy?
NO

Excluded under both property and perils sections of the policy
Coverage for this exposure is provided under an Equipment Breakdown policy Other Standard Property Exclusions

Mechanical Breakdown
Centrifugal Force
Pressure Vessels over 15 psi
Boilers under steam pressure The Financial Picture
Over $370M in EBI premium in 2012
Conservatively representing exposures of a $ 1 Billion of premium
Exposing a $650 M in premium shortfall

That's a compelling Business Opportunity Questions to Consider

Would a broker who identifies opportunities to broaden coverage reduce exposure to potential E & O?

How would a client properly informed on coverage prior to the loss, affect retention with that broker after the loss?

How could a competing broker, that identifies a missing coverage, affect the incumbents’ account retention? Retail Strip Plaza Owner
HVAC (heating ventilation and air conditioning) supplied by natural gas roof top units
No boilers or pressure vessels
HVAC units in care and control of tenants

Why would this client require equipment breakdown coverage? Loss Details

Buried electrical cable that supplies electricity to the building from the utility owned transformer arcs out causing damage to the main electrical panel
A standard commercial property policy would not provide any coverage
Equipment breakdown coverage provides for direct damage and business income Value to the Insured

$9,000.00 per week for a generator rental for three weeks
$55,000.00 repair costs
Enhanced claims experience Equipment Breakdown Insurance complements a commercial property policy covering the standard property exclusions for:
Electrical arcing
Mechanical breakdown
Boilers and larger pressure vessels Where are our losses ? Questions Equipment Breakdown Coverage & Extensions

Coverage is provided for the sudden and accidental breakdown of a defined object and resultant direct damage caused.

With extensions for damage such as:
Spoilage
Business income
Extra Expense
Hazardous substances Object
Mechanical or electrical machine or apparatus which generates, transmits or utilizes mechanical or electrical power
Electronic equipment (data processing and communication equipment)
Boilers and pressure vessels

Including associated wiring and piping Types of Equipment Covered










Electrical
Mechanical
Air conditioning and refrigeration
Computers and communication
Boilers and pressure vessels
Production machines Accident


The Sudden and Accidental breakdown of an object which manifests itself at the time of the occurrence by physical damage to the object which requires Repair or Replacement of the object Definitions

Sudden: quick, without warning
Accidental: unforeseen, unexpected
Breakdown: breakage, something that breaks and ceases to function in the way it was intended to function; physical damage Selling the Coverage
Most Common objections:
I have a maintenance agreement
It is under warranty
Wear and tear is excluded
I don’t own the building
Too expensive Aviva Equipment Breakdown Expertise

As part of National Broker Distribution, Aviva has an engineering department which is available to provide comprehensive underwriting, inspection, and claims service to all Aviva regions Value Proposition for the Customer

Provide a broader property coverage that will address outstanding exposures
Allow access to a highly trained equipment evaluation team
Provide a more comprehensive claims experience Business Opportunity for the Broker

More income by up-selling existing accounts
Retention of business
E & O protection
Included in CPC
Easier to explain coverages
Seamless with Property
No upselling required for Prime & Complete products Compelling Business Opportunity





Advise your clients of the exposures that exist due to exclusions in a standard commercial property policy
Add equipment breakdown coverage This is a transformer Details
drain line clogged and spill tray overflows
water flows into building and finds main electrical panel
main electrical panel shorts out and blacks out building Loss details
$90 000 for new switchboard
$20 000 for temporary generator Details
voltage irregularities cause CNC equipment and other transformer to arc
no resultant fire
Prime metal policy in place
no production machinery endorsement Loss Details
$60 000 direct damage repairs
$45 000 to CNC equipment alone
7 days business interruption to CNC equipment Details
fuel collects in combustion chamber of boiler
when started an explosion ensues
boiler is destroyed along with a large amount of equipment in boiler room
in excess of $500 000 damages and repairs Details
sprinkler head lets go in main electrical room
transformers short out and refrigeration shuts down Loss Details
$50 000 for replacement transformer
$25 000 for temporary generator
$30 000 consequential loss Details
utility working on line drops a phase being supplied to new condo
transformer overheats and catches fire
fire fighters put out fire but damage backup transformer beyond repair
smoke and fire damage to main electrical room
emergency generator required for one month Loss Details
$70 000 per transformer
$100 000 in smoke and water damages
$750 000 generator rental
Full transcript