Owning and managing a business has many positives and negatives, requiring the performance of varied responsibilities and wearing of many different hats. Most of my clients typically view the insurance renewal process with a sense of dread. Navigating the minefield of carriers, coverages, exclusions, sub-limits, etc. Contracts can be time consuming and frustrating, filled with technical jargon and terminology that can leave you exhausted. After you manage to finalize your renewal, you may still lay awake at night wondering if there is an uncovered claim lurking out there waiting to strike.
What can you do to make the renewal process easier for you and your staff, while also reducing overall insurance costs and maximizing coverage?
Representation
Having a trusted, knowledgeable professional working to secure your interests can make this process much easier. Well trained, professional insurance brokers take their careers and their clients accounts very seriously. Focus on finding a broker that specializing in working with your type of business, and has appropriate designations, such as CPCU. You can learn more about insurance designations and find lists of qualified brokers at http://www.aicpcu.org. Asking colleagues and competitors for recommendations can also prove valuable. Most people are very willing to make an introduction if they are pleased with their broker. They will carefully review your schedules, limits, coverages and exclusions, making recommendations on the package of coverages that will most benefit your account. There are tools available that will confirm your coverages are adequate, such as buildings limits, http://www.marshallswift.com. A good broker will also closely monitor what is happening in the insurance market, tracking trends and carrier appetites.
Alternate Proposals
After you have found a good broker, allow him to select the markets he would like to approach on your behalf. Your broker will work hard for you every year, but the market is fluid and can change quickly. Allowing a second broker to review your account every 3 to 5 years will ensure that your account is placed with the best carrier for your needs.
Keep clear records*
Use Microsoft Excel or another spreadsheet program to keep clear and current details of your building(s), vehicles, drivers, and other account schedules of information. Retain clear and current records of contracts and certificates of insurance from all sub contractors and third parties you do business with in the event they cause any damage or claims. Ask your broker and attorney to review these documents for proper wording and limits. You should also keep details of past claims if you have any. This will make it easy for a potential carrier to assess your account quickly.
* This item is very important. Most underwriters are overworked. They will eliminate some of their workload by taking all of the accounts that are lacking information or are poorly prepared and instantly decline them. Your broker will play a big role in making your submission as attractive as possible.
Housekeeping
Some carriers prefer to pre-inspect risks prior to offering a quote. The easiest way to clean up your account is to take care of visible debris, make sure handrails are secure, and move items away from burners and boilers. Take a look at past carrier recommendations to see if there are any items suggested that you may not have completed. Typically these things are not expensive and can make a big difference in the way you present to a carrier.
Quote review
Once your broker produces all of the quotes you will be reviewing together, consider all the factors, not just the price. It is easy to produce quotes that are cheap, but you usually get what you pay for. Compare your coverage forms and exclusions; make sure the quotes are basically the same. If there are differences, confirm that they are reflected in the price.
Ask to see the AM Best rating for the quotes your broker provides. AM Best provides financial ratings of all insurance companies, and their indications can help offer some guidance on the strength and longevity of the carrier with whom you are doing business.
Check your deductibles. If you have some frequency in claims, you may want to take a lower deductible to reduce your annualized risk management costs. However, a risk-free insured may be willing to take a higher deductible to reduce insurance costs. This allows you to keep more cash on hand in the event the occasional claim comes along. Again, your broker can help you analyze your claim history and provide some claim scenarios to assist in determining which plan makes the most sense.
Throughout this article, you will note a recurring theme: the assistance provided by your broker. I cannot stress enough how important a knowledgeable broker is to your business, coverage and profitability. There are many insurance professionals who genuinely care about providing the best services to their client. If you don’t feel you have one of these professional working for you, I urge you to find a new broker. They are out there and not hard to find.
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Jonathan S. Carroll, ASLI, CRIS
Bradley & Parker
320 S. Service Rd, Melville, NY 11747
O - (631) 981-7600
D - (631) 650-4034
C - (917) 376-0075
F - (631) 981-7681
