December 1, 2023
John Kennedy, CPA
John Kennedy, CPA, president, ARA Insurance, Overland Park, Kan., a subsidiary of the American Rental Association (ARA), recently answered questions from Rental Management about the insurance industry, the growth of ARA Insurance and the outlook for 2024.
Rental Management: ARA Insurance has continued to grow and expand in terms of the number of ARA members insured. Why is this happening?
John Kennedy: We continue to see growth in the number of members we insure. 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 the rental industry and ARA as we are proud to give back to ARA in the form of sponsorships and funding risk management initiatives.
Rental Management: What is the most frequent type of claim ARA Insurance received in 2023 and how can rental stores do a better job to reduce these risks?
Kennedy: As in previous years, auto-related claims were by far the most prevalent in 2023. Over the last several years, there has been an increase in drivers on the road and more opportunities for distracted driving (cell phone usage, etc.). Both of these factors lead to more accidents. On the other hand, vehicles these days are more sophisticated with certain safety censors such as backup cameras. These devices have been 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. A good place to start would be the ARA Professional Driver Education Program (PDEP) and/or the Box Truck Training course offered through RentalU.
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. This begins with hiring good people and creating a culture of safety for employees. Training 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: This past year has had several natural disasters with wildfires, hurricanes, tornadoes, flooding and more. What do you think this might mean for the availability of insurance and rates in 2024?
Kennedy: Natural disasters continue to be on the rise in recent years. We were fortunate in 2023 that hurricanes that made landfall in the U.S. were not as devastating as Hurricane Ian from a year ago. The higher frequency of natural disasters along with the resulting losses drive property insurance rates up in the U.S. and across the world. This also creates challenges for the capacity of property insurance in certain areas more prone to natural disasters. We see some impact to this, but for the most part we have been able to provide stability of insurance capacity in these specific geographic areas.
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 is all that ARA Insurance does, so we are completely committed to 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 Agents have decades of experience in the equipment and event rental industry and are able to advise members on both insurance and risk management best practices.
