Not All Lloyd’s DI Policies Are Created Equal
The use of Lloyd’s of London personal lines coverage has seen an increase in recent years. One reason is due to the realization by employers that benefit options must address the needs of their diverse workforce which includes protecting highly-compensated key employees with an equitable disability benefits solution. Remaining competitive by attracting and retaining key employees is at the forefront of corporate minds and offering a broader range of benefit options above and beyond healthcare helps to align goals and enriches benefits packages.
There has also been a focus in sales and marketing efforts by U.S.-based Lloyd’s Coverholders. Each Coverholder works with underwriters in London to provide the most favorable terms based on the risk being presented. Lloyd’s coverage is usually “last resort” which simply means that domestic carriers can’t or won’t cover the risk.
Lloyd’s remains a marketplace much like it was back in the 1600’s. The business written at Lloyd’s is brought to specialist syndicates, who price and underwrite risk via brokers and Coverholders. Much of the capital available at Lloyd’s is provided on a subscription basis – where Lloyd’s underwriters join together as syndicates and where syndicates join together to underwrite risks and programs. Behind the Lloyd’s market is the Lloyd’s Corporation, not itself an insurer but an independent organization and regulator that acts to protect and maintain the market’s reputation.
Coverholders may work with different syndicates and underwriters which results in varying outcomes to premiums, policy language and terms. We often find that producers choose coverage for their clients solely based on premium, which may provide the client with less-than-favorable policy language. Clients place trust in their producers/advisors to protect their livelihood by providing not only the most competitive premiums, but the best possible coverage. It is important to review provisions in a policy and compare them to illustrations received by another Coverholder. As an example; one policy can state a “disability due to sickness must manifest itself while the policy is in force.” This would be problematic if the insured was diagnosed with cancer prior to purchasing the policy, but has a disability due to the cancer during the policy term. In this situation, the client may not receive benefits for their cancer claim. There are also provisions in some policies that state “the policy can be cancelled with 30 days of notice.” This is also a provision that is not in the client’s best interest. Would clients pay a slightly higher premium for a policy that does not include this provision? In most cases, the answer is yes.
Last but not least, there is tremendous value in service standards which vary by Coverholder. It is important to get to know the Coverholder you are working with and understand the type of service they provide before, during and after the sale. This pertains to billing, policy changes, renewals and claims. Choosing a Coverholder that has been in the specialty business for a greater period of time brings forth the confidence that they have been elected by Lloyd’s of London due to high standards requirements.
Petersen International is the leading personal lines Coverholder in the United States, specializing in disability income protection. Founded by W Harold Petersen after he witnessed the horrors of disability, and experienced its widespread effects first-hand after his father became afflicted with a chronic condition causing pain in his back which lasted for years, and resulted in total disablement and the loss of the family’s dairy farm. The Petersen Family struggled financially for many years. Harold Petersen successfully made it his lifelong goal to make certain that his story echoes throughout the insurance world. He vowed to help as many people as possible in protecting their incomes against the devastating effects of unforeseen disablement.
Petersen International offers Disability and Life insurance solutions usually in concert with domestic carriers to help minimize client and corporate risk. Contact Petersen International at (800)345-8816 to learn more about our solutions and how we can minimize your clients’ financial risks with unique insurance platforms.