John Kennedy, CPA, president, ARA Insurance, Kansas City, Mo., a subsidiary of the American Rental Association (ARA), recently answered questions from Rental Management about the impact of natural disasters and other issues on the insurance industry and the growth of ARA Insurance.
Rental Management: This past year once again has had more than its fair share of natural disasters with wildfires, tornadoes, hurricanes, flooding and more at a time when the pandemic continues. What do you think this might mean for the availability of insurance and rates in 2022?
John Kennedy: Natural disasters have definitely been on the rise in recent years. We did see some improvement in frequency of these events this past year as compared to 2020, which was a record year for hurricanes forming and making landfall in the U.S. Wildfires were especially damaging in 2020 as well. The higher frequency of natural disasters along with the resulting losses drive property insurance rates up in the U.S. and across the world. We see some impact to this, but for the most part we have been able to maintain more stable rates than the market. The ARA Insurance program is structured with reinsurance for natural disaster losses so that has helped minimize large rate swings.
Rental Management: ARA Insurance has continued to grow and expand in terms of the number of ARA members insured. What do you attribute this to?
Kennedy: We have continued to see growth in the number of members we insure. In fact, despite the ongoing pandemic, ARA Insurance added many new insured members these past couple of years. I believe this growth is a result of the trust we have earned with ARA members over the years. Serving our members is at the very heart of our mission and we are always looking for new and better ways to do so. I also believe
our insurance and risk management products are second to none in the equipment and event rental industry. As ARA Insurance grows, it benefits ARA as we are proud to give back to ARA in the form of sponsorships and funding risk management initiatives.
Rental Management: Were the types of claims in 2021 different and how can rental stores guard against these risks?
Kennedy: As in previous years, auto-related claims were by far the most prevalent in 2021. Over the last several years, there has been an increase in drivers on the road and more opportunities for distracted driving with mobile phones and more. Both of these factors lead to more accidents. On the other hand, vehicles these days are more sophisticated with certain safety sensors such as backup cameras. These devices have proven to reduce accidents in a meaningful way and may somewhat mitigate the risk of distracted driving. I encourage members to take advantage of the risk management resources offered around safe driving as part of their ARA membership. These include the ARA Clean. Safe. Essential. (CSE) online training course on loading and unloading inventory available through ARA’s RentalU, the Professional Driver Education Program also offered through RentalU and the National Safety Council’s Defensive Driver Course which is offered through ARA Insurance.
Rental Management: Is there anything rental stores can do to potentially limit the cost of insurance premiums?
Kennedy: It starts with a rental store owner running a good operation, which minimizes costly accidents, in addition to hiring good people and creating a culture of safety for employees. Training of your staff in this culture is extremely important. Utilizing a written rental contract with your customers is another way to protect your rented equipment from damage or losses. There are many resources provided by ARA or ARA Insurance to help improve your safety and risk management processes.
Rental Management: How is ARA Insurance different from other companies that offer coverage to those in the equipment and event rental industry?
Kennedy: ARA Insurance is truly a member-directed company looking out for the best interests of our insured members. The ARA Insurance board of directors is made up of ARA members. Providing insurance services to ARA members also is all that ARA Insurance does, so we are completely committed on being experts in insuring those in the equipment and event rental industry. With other insurance companies, the rental industry normally is a small piece of what they do so they likely do not invest much in understanding the risks. Our ARA Insurance Preferred Agent network has decades of experience in the equipment and event rental industry and are able to advise members on both insurance and risk management best practices.