Five Ways to Get the Most Out of Your Property Insurance
By: Avi Lev, CLCS, vice president, Assurance
As a business owner, you expect to increase profits, grow market share and continue climbing the ladder of success. Every vendor a company utilizes plays a part in that success or failure. When it comes to risk management, how is your insurance broker bringing value to your business? Unfortunately, many insured parties are unable to answer this question.
Property insurance is about more than just basic brokerage services. Rather, it’s about adding value in multiple areas through consulting, strategy and accountability. Asking yourself the five questions below should help you get the most out of your property insurance and your relationship with your insurance broker.
1) What does your submission look like? An application for insurance should contain all pertinent information an underwriter would need. More importantly, it should illustrate and sell the insurance carrier on why it should want to insure your risk. A good cover letter, a loss summary explaining how losses are being controlled and a high-quality benchmarking analysis can go a long way when your broker is marketing your submission to a carrier.
2) How is your broker engaging with insurance carriers? Real estate owners might assume that the more insurance carriers a broker approaches with their submission, the more choices they will have. That assump-
tion is incorrect. Carriers, like every-body else, value commitment and relationships. If an insured party asks a broker to send out its program to every carrier, it ends up “polluting” the account. A carrier who sees a
risk every year and never writes the account most likely will put that account at the bottom of the pile or decline it right away.
Your broker should provide information on what carriers he or she is going to submit to and why. If you are not confident your broker has a marketing plan in place, then you are probably not in the best position to have a favorable outcome.
3) Aside from pricing and comparable coverages, what goals are set out for your insurance program? Most consumers are used to the following process: gather information, send it to carriers, compare coverages and sell the account. This is not how best-in-class (BIC) companies do business. Instead, they lay out goals and commitments early in the process, detailing how the insurance program will have a bottom-line impact on the company as a whole. Some of these will be one-year goals and commitments, while others will be longer term.
Examples of these types of goals and commitments include claim controls, educational opportunities and ways to lower the cost of the program, as well as moving from real insurance to self insurance, scheduling a full year of meetings and other definitive goals.
4) Does your risk management strategy stack up to those of competitors? Benchmarking — often a missing link — entails comparing one’s business processes and performance metrics to industry bests or BIC practices from other industries. Look for the following top three benchmarking items
- Pricing: BIC companies don’t compare pricing from one year to another or from one broker to the next. Rather, they look to compare their pricing to competitors their size and with a similar insurance program design. This provides the data needed to ensure that your company is paying a fair price.
- Program Structure: BIC companies review program structure every three to five years, depending on growth and risk management goals. They also continuously explore how they can assume more risk or protect their insurance investment through self insurance, which enables them to reinvest tax protected dollars back into their businesses.
- Service Platform and Delivery: BIC companies look for ways to free up top-line costs to increase their bottom line. To achieve this goal, they engage with agents and brokers who can help them achieve a better overall operation and make their companies more profitable.
5) How does your broker hold himself or herself accountable? Commitment and delivery are two important features you should expect from a broker. BIC companies favor brokers who have a strategy that demonstrates how they will take the company from point A to point Z. A simple property insurance quote and a verbal agreement by the carrier to provide coverage do not suffice. The strategy should spell out safety goals, risk management, metrics, pricing decrease strategies, culture improvements and education goals. It also should include information about insurance industry changes that will impact your business.