There used to be only two certainties in this world—death and taxes. Now there's a third, at least for business owners: insurance. After years of intense competition for business property insurance, liability and worker's compensation, which kept prices artificially low, the insurance industry has decided to take a hike. Even before September 11 and the collapse of Enron, rates were slated to rise, which is bad news for booksellers watching their narrow margins erode.
This spring, when Judy Atkiss, CFO and facilities manager at 32-year-old BookPeople in Austin, Tex., went to renew her store's property and liability insurance, she had to pay a 30% increase. "This is with having a lot of different agents bid it and changing companies," she told PW. "Insurance is not a pretty picture." Sally Brewster, manager of Little Professor Book Center in Charlotte, N.C., isn't sure where the money will come from if her liability insurance goes up. To pay for increases in health insurance, which at her store has risen 35%, she said, "we've looked at turning off the air conditioning." But she might have to cut even more corners for liability, which went up 20% two years ago. "I think I pay too much, but I've talked to other retailers, and they pay the same amount."
At Rainy Day Books in Fairway, Kan., founder and president Vivien Jennings said, "Insurance is a pretty substantial part of our budget, and I've never had a claim in 27 years." To help bring down costs, she excluded herself from liability insurance, which members of the board of a company are allowed to do in Kansas, so that her salary wouldn't be included in the payroll.
Jennings learned the ins and outs of her insurance policy the one time she did try to make a claim. When $5,000 worth of inventory being stored in a tent for an outdoor book fair was destroyed in a downpour, she was told that her coverage did not cover off-site events. She has since added riders to make sure that doesn't happen again, and recommends that booksellers check their policies carefully. "Most people are probably underinsured," she said.
The ABA's Best Kept Secret
Five years ago, the ABA stepped in to help booksellers with insurance problems by establishing the League of Independent Book Retailer Insurance Services (LIBRIS), underwritten by Fireman's Fund. Later this summer LIBRIS will switch carriers, because, according to program manager Richard Poling, "Fireman's is making a wholesale exit from this business." In addition, Poling anticipates that LIBRIS will raise its rates 10 to 20% on average. "The insurance business is pretty rough," he said. "We had a bookstore in the World Trade Center, and we took a hit."
To date, LIBRIS has been one of the ABA's best-kept secrets. Fewer than 20% of ABA's members, about 500 stores, have taken advantage of the ABA subsidiary, since it was first launched in Denver in April 1997.
Unlike most insurance agents, LIBRIS's program managers don't work on a commission. Moreover, LIBRIS has paid a dividend each of the last four years, although Poling is not making any promises about 2002. To get the word out about LIBRIS, in late April the ABA redesigned the www.libris.org Web site so that booksellers can request quotes online. They can continue to call the toll-free number (888-694-8585) as well.
ABA marketing officer Michael Hoynes regards LIBRIS as "one of a cadre of services that help those who want to participate." The trio of bookseller services includes ABA's small-package freight program, which provides discounts on shipping via FedEx ground, and its credit-card-processing program with Bank of America. At BEA, LIBRIS announced that it is expanding its mission to provide coverage for small presses. "Based on our evaluation of the market," said Hoynes, "a lot of smaller companies don't get insurance because of the minimums."
Matt Miller, general manager of the Tattered Cover and a member of the LIBRIS board, encourages ABA members and members of regional bookseller associations to take advantage of LIBRIS. "For ABA members, it is your company," he noted. "When booksellers go out and look for insurance, they're usually grouped with other retailers. Some of the things that bookstores have asked for are found in LIBRIS." Among the special provisions available through LIBRIS are coverage of cafes within bookstores and used and rare books.
Even before Carla Jimenez, co-owner of the 10-year-old Inkwood Books in Tampa, Fla., joined the ABA board, she signed on for LIBRIS. "I'm someone who supports ABA programs, and LIBRIS is something I expect from my trade association," she said. "Literally, I got more attention in the first 24 hours than I had gotten in five years from my local agent. This was someone who understood my business."
While LIBRIS isn't a panacea, it does offer booksellers a place to turn to for insurance help. Some have found its quotes to be lower, or the same, as those provided by their local agents. Others prefer to stay with their current insurers, because, as Jennings of Rainy Day Books, noted, "You ought to walk it like you talk it. To the extent where we can, I like to support local businesses."
