On 11/25/2019 I received an email form a Mr. Timothy Lytton. The just of the email was to ask if I would consent to an interview. I agreed and then Timothy sent me a list of question in an email. For reference purpose the email content is copied and pasted below under the caption “INTERVIEW QUESTIONS”.
MY DISCLOSURE AND CONTEXT
First, my name is Steve Valencia and I am the owner and broker of Athena Insurance and Financial Services located at 205 Court Street, Jackson CA 95642. The information that I am about to share with Tim is for my reference purposes and that of an informal interview with Timothy.
The responses to Timothy’s questions are not meant as legal or tax advice. Furthermore, they are not answer to all giving farm or agricultural risks. What I can say is that each and every farm risk is unique in the operations and are evaluated by means of verbal and paper applications for responses insurance carriers are wanting answer for.
Coverage, terms and conditions will vary from State to State and from insurance carrier to insurance carrier.
With reservation to amend, delete or modify. All responses are in general terms only.
I have added separation lines to the email questions below for ease of reading
Email content questions and Timothy’s information
Please describe your current position: company, title, responsibilities, number of years at company and in current position.
My current position is Insurance Broker and owner of Athena Insurance and Financial Services, 205 Court Street, Jackson CA 95642. California Broker #0588228 and National Producer #2709340. I have been such since 1996.
Please briefly describe your professional credentials and training.
My professional training includes Life Underwriting Training Council Graduate 1983 LUCT for life insurance, State of California Insurance successful examination license for life, health, property, casualty, surety and annuity.
In addition, periodic required continuing education examination and years of hands-on experience
Please briefly describe the career path that brought you to your current position.
I first entered in to the insurance industry in 1980 as a life and health agent. I left the insurance for a period of time and returned once again in 1993 to become an independent agent that write nearly all lines of insurance with special emphasis on timber, forestry, construction and agriculture.
If I were a small or medium size fruit or vegetable farmer seeking coverage for any food safety related risk, including liability and product recall, what types of coverage would be available for me to purchase? Let’s assume that my operations include both growing and selling raw produce and small-scale processing, for example, making and selling jam from berries.
Can you define the categories of loss that are covered by this coverage? What would be common examples?
The defining of the categories of loss that are covered “may be” many or it may be “none/excluded” depending on the operations of the “risk.” If there were common examples, there would first need to be a Farm application completed and sent to an underwriter of various companies to then received quotes whereby each underwriter “should” display the terms and condition of the insurance offer or denial.
Once again, returning to the questions what would be common? What would be common if the fact finding interview and applications process whereby the agent,broker and/underwriter can determine the individual farming exposure to then determine if the risk is eligible.
If eligible, “the specific” carrier, if admitted, will make a quotation which will include policy form, terms & conditions and more.
Many times this underwriting process will involve the carrier underwriter asking more questions regarding the risk to get clarification of responses that have bee supplied on the application. As not farm, farming operations are the same, the questions from the underwriters will vary.
Furthermore, not all Farm and Ranch Insurance carriers offer all “categories of farming operation risks.” As mentioned in the disclosure.
Now as to “common categories,” I am assuming were are talking about same state, same operations and a hypothetical exposure and operations that are identical in terms of coverage request and answers supplied on the same applications. “Which is not the case!” Not all operations are the same. But herding the cats into the barn.. ok!
Generally speaking, lets us take a crop grower of Chinese Green Veggis in California. It have been my experience that as “law suits” and case president takes please, my assumption, that carrier will tend to move out of a product offering. Green vegetables is an example. For those insurance carriers that do remain in the market place we have both admitted and non-admitted carriers. We will get back to admitted vs non-admitted later.
Some carriers will “require” that certain methods of growing, chemical exclusions, processing and participation adhering to certain crop growing association be practiced as “best practices”
Some will decline due to the amount of losses in the particular area
Some will accept and offer endorsements to the policy that “may” have exclusions to protect the carrier for negligent operations. I think all actually have a hand full of exclusion for such operations.
In general there are common coverage parts that are required by each State. A review of which coverage parts would need to reviewed on a State by State basis. But I get what you are asking. Generally speaking “General Liability” is common. As to other coverage such as crop coverage, spoilage, product recall, bacterial or other “possible” optional coverage parts will depend on the carrier, the state and the client. Not all clients want all coverage parts.
In conclusion, I would say that to there are common coverage for all policies would be a mistake. To make a comparison of one policy to another and then make such a statement would require an application and a quote from two or more \different insurance carriers.
What common categories of food safety related losses would not be covered under this coverage? What would be common examples?
This question is too wide to encompass with a brief response.
There is a much larger list than the examples I could provide here and again it will depend on the risk and their operations. Let’s take a poultry farm for example. In California good luck finding an Admitted Carrier to insure “new” large, concentrated poultry farm operations. Once again referring to more recent law suits such as Salmonella and ground water pollution.
For those that would take on such operations, there are going to be terms and conditions, forms and endorsements that are not necessarily common to all policies.
In other States where the laws may be different on farms, poultry laws and pollution laws the coverage offered may be different.
What could be considered as a common item necessary in quoting are “hard copy loss runs” A claim history letter or report from the prior insurance carrier.. Meaning, “if” the applicant has had prior insurance, it is a requirement they produce a claim history report. Even if there are no losses, most carriers will not begin the quote process without a letter on the claim history form the prior carrier. . There are reasons.
Can you describe any other key terms of this coverage, for example, coverage limits, deductibles, exclusions?
Key terms such as coverage limits are broken down into coverage parts. If applicable to a specific policy it could be General Liability, Personal Liability, Personal Injury, Property, Loss of income, electronic data recovery, non-owned auto, bodily injury, product recall, cargo coverage, crop, advertising injury, medical, completed operations, orchard endorsement… and the list can go on and on depending on the specific risk, the State(s) of operation and more.
The limits can vary on the particular type of item as mentioned. So for example, general commercial farm liability, I have seen limits as low as $300,000 and more generally limits of $1,000,000 per occurrence with a $2,000,000 aggregate. Some policies have excess commercial farm liability with limits as high as $10,000,000.
Can you describe generally the underwriting process for this type of coverage? What are the key considerations in underwriting?
(a) What farm characteristics are relevant to the assessment of food safety risk? The safety procedures used by a particular farm operation.
(b) To what extent and how are the specific products that are produced considered in the risk assessment? Each carrier has it’s own evaluation criteria
(c) How do underwriters assess the probability of a covered event? Questions deferred to an underwriter for a particular risk
(d) How do underwriters assess the potential loss associated with an event? Most use statistical rating and statistical claim experience
Who is involved in the underwriting process?
The field agent/broker and possibly the Managing General Agent or Program Manager. For some agents and broker who have “direct” access, they work with the insurance underwriter. For agents / broker working indirectly, the access is through the in-house employee underwriter of the Managing General Agent or Program Administrator who then submits to the insurance carrier underwriter, unless they have the “pen” and “authority” to underwrite and issue per a written contact.
How standardized is the underwriting process? How much flexibility and discretion does an underwriter have?
How many field of law are there? How many to you know about extensively? It is very standard if you are working with one Captive Agent who writes for one company and we are focusing on one kind of operations.
For me to operate in that fashion would mean to turn a great deal of people away. As such, I have nearly 12 to 18 farm insurance carriers to work with. I have direct appointment and agency agreements with many Managing General Agencies. And, there are some things that are not handled under a farm policy that are best handled in other personal lines type policies. Yes, this all is leading to the site I am developing to keep track of who writes what? https://WhoWritesWhat.com.. Speaking of which I need to get back to programming and will return her at another time to review and amend.
Are there any consulting services associated with this coverage, for example, loss control consulting? Can you describe these services and provide some examples?
Yes and no, but generally yes! lol I write a mom & pop’s hobby farm policy and I write large commercial farm operations. The type of consulting mom and pops will receive is from me the Broker. On very large farm operations, some insurance carriers offer such services, depending on the operations. Most large farm belong to some form of a farm bureau and have their ears on the words provided by such organizations.
Is this coverage a freestanding insurance product or is it typically included in a broader coverage product or added to or bundled with other types of coverage?
Loaded question. It depends on the carrier. Some have common parts and standard template type of core coverage with optional endorsements.
Are there any forms, such as ISO forms, for this type of coverage? Where would I be able to find a copy of one of these forms? Would you able to send a copy of one of these forms with generic coverage information on it?
Some offer ISO forms and some have their non-iso forms. Sending you copies of policies with all forms and endorsement. I think not. That is way beyond the amount of time I am willing to “donate.”
Do you have any promotional materials for this coverage, either for agents and brokers or for consumers—such as pamphlets or webpages or PowerPoint slides—that you could share with me?
I am sure there are plenty. As I further develop https://USfarmInsurance.com I will upload .pdf documents. They would be generic in nature and currently my biggest web projects are WhoWritesWhat.com, WhatsHappeningToday.com an this site. I generally start off with a verbal interview, move to gather information on an application and hopefully write the business.. I work on commission. I get paid one of two ways. When I write an insurance policy and when someone refers someone to me who buys a policy.
As an Independent Insurance broker no carrier pays me a wage, salary or any employee benefit. Time is a valuable thing and I have spend quite a bit of time helping you thus far with these questions and I hope you appreciate my efforts.
To what types of farming operations do you sell this type of insurance?
I write nearly all categories of insurance. Not to over due my web project who writes what, but that is what I will working on today. https://WhoWritesWhat.com is going the the Insurance Shopper site for the consumer, retail agents and brokers, managing general agents, program administrators and wholesale insurance companies.
WhoWritesWhat.com will be used by me and my staff to keep track of who writes a particular kind of insurance.
For the consumer insurance shopper the use is free. For the professionals and carriers there is a subscription fee.
In what states do you sell this insurance?
I will eventually write in 50 States. As list of States can be found here. Click here
Is this typically an admitted line of coverage or nonadmitted?
When ever possible we try to place any insurance policy with an Admitted Carrier first. If the “risk” does not qualify for an Admitted Carrier we move on to the non-admitted carriers. That having been said we always had a discussion on what and admitted carrier is vs. a non-admitted carrier and we always disclose this in writing also prior to processing any bind request. Full disclosure.
In your personal experience, approximately what proportion of farmers you deal with buy this type of coverage? Can you give a ballpark estimate of the number of farmers you have sold this type of coverage to?
Since I began my insurance agency in 1996, I have helped over 12,000 clients in many areas of insurance. I do not have a percentage for you. I can say that it is less than 30% of the agencies policies in force today.
Why do you think this type of coverage is so common / not universal / so rare among farmers?
I do not know that o be the case Timothy. Let us come at this question from a different approach. A “prospect” calls me up and we have a discussion. And let us say that “they” claim I just want home insurance. So, we begin the process of asking the standard questions of a home insurance policy. Do you have any business exposure and do you do any farming are questions that would be required to be answered by the prospect. Now, assuming they are not fibbing, we will only write a home policy.
Now, let us say they tell the truth. There is not way we are going to write a home policy if there is farming exposure and be able to cover the farming exposure. This would be mal-practice and if I was aware of such a situation I would decline to help this person with a personal homeowner policy.
I would point out the pit falls of not having the correct type of policy if there are farming operations on the property. There may be some possible exceptions such as if they are leasing the property to an insured tenant farmer and the tenant farmer has a farm policy and names our insured as an Additional Insured on the tenant farmers insurance policy and we get a copy to show to the home insurance carrier.
Who are your competitors in food product liability and recall insurance markets? What other companies sell these types of coverage to farming operations?
My competitors are every agent that can find a market. What other companies that sell these types of coverage to farming operations is the $64,000.00 questions Timothy. Rembering who writes what is the problem. Then the next problem is gaining access and finding the property form.
Thus the reason I feel that https://WhoWritesWhat.com is going to be work a fortune to all professionals that us it once completed.
Does your firm sell food safety related coverage to other types of organizations, such as schools, long-term care facilities, farmers’ markets, restaurants, caterers, produce wholesalers and distributors?
Thank you for this opportunity Timothy D Lytton.
Timothy D. Lytton
Associate Dean for Research & Faculty Development
Distinguished University Professor & Professor of Law
Center for Law, Health & Society
Georgia State University College of Law
Post Office Box 4037
Atlanta, Ga. 30302-4037