Retail/Service

Retail/Service

What Do We Write?

• Farmers has elected to pursue eight historically profitable types of businesses under the Retail/Service program.

What Do We Write?• Printers and Copiers• Hardware and Home Improvement• Food Stores• Retail Stores• Barbers and Beauticians• Dry Cleaners• Repair Shops• Offices

What Do We Write?

• Under each of these categories, we have chosen a number of SIC codes (Standard Industrial Classifications) which should be the focus of your solicitation activities.

What Do We Write?

• What is an SIC Code?– The SIC is the statistical classification

standard underlying all established Federal economic statistics, classified by industry. It was developed by type of activity in which the business is engaged.

Eligible SIC Codes

• Where can you find a list of eligible businesses?– The Retail/Service Business Guide– The agent’s computer system– Vendor’s software

What Will Farmers Write?

• Farmers will only accept those printers listed. For example:– SIC 2732 Books-Printing or binding– SIC 2751 Commercial printing,

letterpress– SIC 2752 Lithographer– SIC 2754 Gravure printing– SIC 2759 Printing NOC

What Will Farmers Write? (Continued)

• SIC 2761 Business form printing• SIC 2759 Greeting Card Printing• SIC Printing notebooks/paper• SIC 7334 Photocopying service/quick

printing

General Underwriting Rules

• All industry groups under the Retail/Service BOP program are subject to certain general rules, limitations and requirements.

• It is important to know and understand them in order to conduct an initial screening of your prospects.

General Underwriting Rules

• Buildings and Business Personal Property should be insured for 100% of the current replacement cost.

• If the insured must carry a minimum amount of insurance that is at least 80% of the replacement value of the building and business personal property to avoid a penalty.

General Underwriting Rules

• All plumbing and wiring must meet or exceed current building codes. Buildings over 40 years old must have renovated wiring, plumbing and roof. (Proof required)

• The business must be located in Fire Protection class 1 through 8.

• Buildings must have a 60% or greater occupancy.

General Underwriting Rules

• Businesses open to the public 24 hours per day are not eligible

• Buildings six stories and over must have automatic sprinkler protection with grading 70 points or better.

General Underwriting Rules

• The following types of risks must be submitted to your underwriter for approval.– Prospects located in a building that is occupied

by other occupants that would not be eligible for coverage with Farmers. E.g. bar, tavern

– Businesses located in buildings over 40 years old

– Risks which have had their insurance cancelled for any reason within the past three years.

Specific Underwriting Rules

• Printer and Allied Businesses– Have excellent housekeeping– Store inks and solvents in fireproof

containers and cabinets– Have an approved hazardous waste

service– May not exceed 15,000 square feet

Specific Underwriting Rules

• Printer and Allied Businesses (Continued)– Have annual receipts less than $3,000,000– Printing equipment value less than

$3,000,000– Building and contents values combined

less than $5,000,000 per location– Customers must sign off for all sensitive

jobs

Specific Underwriting Rules

• Ineligible Printing Operations- Do Not Solicit printers doing any of the following work:Bond Certificates BanknotesSecurity certificates CurrencySecurities proposals PublishingLottery Tickets Political brochuresStock Certificates

Specific Underwriting Rules

• Hardware and Home Improvement– Lumber yards are not eligible. However

hardware or home improvement stores with a lumber department are eligible.

– Must meet all general underwriting rules– Must have annual sales less than

$3,000,000

Specific Underwriting Rules

• Hardware and Home Improvement (Continued)– No more than 25% of receipts can result

from off premises operations such as installation, service or repair.

– Store cannot exceed 15,000 square feet– Building and personal property values

must not exceed $5,000,000 combined per location..of products.

Specific Underwriting Rules

• Hardware and Home Improvement (Continued)– Stores must have a central station burglar

alarm if there are incidental ammunition sales, or sales of sporting goods.

– Stores selling fire arms, bulk kerosene or bulk propane are not eligible.

Specific Underwriting Rules

• Hardware and Home Improvement (Continued)Stores renting any of the following items are not eligible: Lawn mowers Chain saws

Scaffolding Power toolsSpray painting equipment LaddersTrucks or Trailers

Specific Underwriting Rules

• Hardware and Home Improvement(Continued)– Stores deriving over 10% of their income

from rental operations are not eligible– Stores deriving over 50% or more in total

receipts from repair operations are to be written in the repair shop industry group (SIC 7600 series)

Specific Underwriting Rules

• Food Stores– No incinerators on the premises– Store cannot exceed 15,000 square feet– The store must have a central station

fire/burglar alarm– Outdoor markets must have a permanent

location and be open year around

Specific Underwriting Rules

• Food Stores– Building and business personal property

values must not exceed $5,000,000 combined per location.

– Sales of alcoholic beverages including beer, liquor or wine must not exceed 40% of total revenues.

Specific Underwriting Rules

• Food Stores that engage in any of the following are not eligible:– Selling ice cream or similar products from

vehicles.– Door to door sales.– Sales of live animals, including chickens.– Repackaging of products of others.

Specific Underwriting Rules

• Retail Stores– Building values may not exceed

$5,000,000 and personal property values may not exceed $5,000,000 for a combined maximum limit of $10,000,000 per location.

– Annual receipts may not exceed $5,000,000 per location.

Ineligible Retail Stores

• Stores that derive more than 10% of their revenue from the sales of used merchandise.

• Furniture stores selling any used mattresses

• Oriental or Persian rug dealers• Florists with glass enclosed

greenhouses

Ineligible Retail Stores

• Stores deriving over 25% of their income from off-premises installation, service or repair.

• Stores deriving over 10% of their receipts from personal property rental (except video rental).

Additional Rules-Apparel Stores

• Must be in business with same ownership for three years.

• Have a D&B rating of EE1, EE2 or better.

• Have a net worth of at least $20,000.• Sell only clothing which meets

Federal Flammable Fabrics Act.

Additional Rules-Apparel Stores

• Must have a central station burglar alarm.

• Must attach alarm tags or security cables to expensive merchandise to discourage theft.

Additional Rules-Furniture and Appliance Stores

• In business three years under same ownership.

• Have a D&B rating of EE1, EE2 or better.

• Net worth of at least $20,000.• Furniture stores over 7,500 sq. ft. must

have an automatic sprinkler system with a minimum ISO grading of 70 points.

Additional Rules-Barbers and Beauticians

Barbers and Beauty Salons that conduct thefollowing operations are not eligible for coverage:

Beauty schools Cosmetology schools Tanning operations

Barber colleges Facial Schools Permanent make-up

operations

Additional Rules-Dry Cleaners and Laundries

• Plant may have no more than 15,000 square feet of floor space.

• Combined building and business personal property values may not exceed $5,000,000 per location.

Dry Cleaners-Not Eligible

Plants with any of thefollowing operationsare not eligible. Rug cleaners Fur Garments

Drapery cleaners Hand laundries Supply services which

supply coats, towels,linens, shirts, table covers.

Additional Rules-Repair Shops

• Premises must be protected by a central station burglar alarm.

• Must not derive more than 25% of receipts from off-premises operations.

• Automobile radio repair should be written under an Auto Trades policy.

Additional Rules-Repair Shops

• No more than 10% of the total receipts can be derived from rental of personal property.

• Building and business personal property values may not exceed $5,000,000 combined per location.

Additional Rules-Offices

• All professional offices must present evidence of professional liability coverage through another insurance carrier.

Coverage and Limits

• Farmers Businessowner’s package is based on the ISO BOP, but provides additional coverages and limits to appeal to the unique needs of the retail or service business owner.

Coverage and Limits

• The Retail/Service policy is written as either of two packages using the Businessowners Special Property Coverage form. They are:– The Primary Coverage Package– The Premier Coverage Package

Coverage and Limits

• The Primary Coverage package is included in all policies while the Premier Coverage package is optional. Aside from the premium difference, most of the differences are related to the limits written under the particular package.

Coverage and Limits

• There are some coverages that are available only on the Premier Package. An example would be Machinery and Equipment Breakdown coverage. See the Retail/Service sales visuals 33-2102 thru 33-2109 for an outline of available coverages.

Coverage Combinations

• Remember the coverages included in our Primary and Premier endorsements are what makes Farmers BOP different. Be sure you become familiar with the protection provided by each of the coverages.

Coverage Combinations

• The process of identifying specific exposures (needs) of the customer, and matching them with the available coverage (features) in our coverage plan establishes them as a benefit to the prospect

• Remember to emphasize the benefits, not just the features.

Marketing SupportThe following folders and visuals can be used tohelp sell these products:

Hardware/ HomeImprovement

Folder33-1102

Visual33-2102

Dry Cleaners 33-1103 33-2103

Marketing Support (Continued)

Folder VisualFood StoresOfficesPrinters & CopiersRepair ShopsRetail StoresBeauty Salons &Barber Shops

33-110433-110533-110633-110733-110833-1109

33-210433-210533-210633-210733-210833-2109

Marketing Support (Continued)

• Agent Survey Forms– These forms assist in gathering the

necessary information to evaluate a prospect. They can be very helpful in organizing the initial survey of the risk to assess the quality of the risk.

Marketing Support (Continued)

• Agent survey forms :– Hardware & Home Improvement 32-7491– Retail Stores 32-7493– Food Stores 32-7489– Printers and Copiers 32-7495– Dry Cleaners 32-7487– Offices32-7485– Repair Shops 32-7483

Solicitation

• Prospect list services– Info USA 800-624-0076– Dun & Bradstreet 800-624-5669– iMarket 800-295-8408– Yellow Pages

Solicitation

• Other lead sources– Client focused marketing folders– Business drive by or drop in visits– Referrals– Trade association membership directories– Telemarketing to targeted risks– Direct mail letters

Three Company Marketing

• Purpose– The three company marketing program is

designed to achieve proper pricing on each policy, to make a positive contribution to surplus, and to be competitive in the marketplace.

Three Company Marketing

• The plan has various eligibility requirements which determine whether the risk may be written in Mid-Century Insurance Company, Truck Insurance Exchange or Farmers Insurance Exchange.

Three Company Marketing

• Ultra Preferred (Mid-Century)– Risks that represent the lowest potential

for severe losses and the highest probability of underwriting gain.

Three Company Marketing

• Preferred (Truck Insurance Exchange)– Preferred policyholders that do not meet

the underwriting requirements for ultra-preferred placement may be eligible for placement in the Preferred (Truck) program.

Three Company Marketing

• Standard (Farmers)– For those acceptable quality risks that do

not meet the guidelines for Preferred or Ultra Preferred placement, but otherwise meet underwriting eligibility requirements, coverage will be available under the Standard program.

Premium Modification Plans Available

• Premium size credits• Individual risk premium modifications

(IRPMs)• Commercial automobile package

discount• Workers compensation account

completion credit

Premium Size Credit

• Based on total package premium (excluding earthquake, machinery and equipment breakdown and auto premium.)

• Premium credits range from 1% at $750 to 15% at $10,001.

Premium Modification

• Individual Risk Premium Modification (IRPM) plans are filed with state regulatory authorities to recognize characteristics of individual risks. They look at: – Management– Employees– Premises– Protection

Premium Modification• The IRPM plan can be applied to all

accounts with a package premium which meets the state minimum premium requirement.

• A credit/debit modification from (-25% to +25%)(40% +/-) in some states is based on judgement for each of the several risk factors developed from agent-provided information and inspections. (See IRPM worksheet 31-3097)

Premium Modification

• The credits/debits available for each category are:– Management (+ or - 10%)– Employees (+ or - 5%)– Premises (+ or - 20%)– Protection ( + or - 10%)

Premium Modification-Auto Package Discount

• A 9% package discount applies to all commercial autos written with Businessowner packages.

Premium Modification- Account Completion Credit• A discount of 5% will apply to the

Retail/Service Industry Policy when the agent writes a Worker’s Compensation policy covering the same business.