One of the most common requests an insurance broker receives is to provide and “apples-to-apples” review and quote of a commercial insurance program. Problem is, many insurance brokers or agents do and fail miserably in the end because there is no such thing. For years, many commercial insurance buyers have viewed program selection as a bid and commodity purchase that warrants little attention as long as the price is “good”. For many buyers this worked, at least until a claim occurred. Then it rests with a lot of individuals from legal to finance that are tasked with figuring out what is covered, up to what level or limit, and when will the loss be paid, if at all. Thus the “apples-to-apples” scenario falls flat with regard to effectiveness.
No two businesses are alike, and no two insurance policies are or should, for that matter, be alike. Each organization has its own type of inherent risk associated with its operations; so too should it have its own customized insurance policies. When a comparison is requested, it should be based on corporate goals, operational shifts, changing economies, growth plans, and contingent risks; not just price. Here are a few areas a commercial insurance client should consider in addition to price:
⁃ In addition to insurance premium, our corporate additional spend for the total cost of risk is…? Do you know that additional cost?
⁃ When were my properties last appraised?
⁃ Are the values appropriate?
⁃ How is the retention structured?
⁃ Can my retention be increased or decreased?
⁃ Have my exposures changed and if so, is my agent or broker aware of them?
⁃ What does my claim history represent?
⁃ Is the claim trend higher or lower over the past three years and why?
⁃ What services may be necessary to reduce my claims and or cost of claims?
⁃ How are the claims being managed?
⁃ Is the claims management effective?
⁃ Has the experience modification factor been reviewed for accuracy?
⁃ What regulatory shifts have occurred since the last renewal?
⁃ Will those regulatory shifts have an impact on my program?
⁃ Can my collateral be reduced on my self insured program?
⁃ How long has my program been in place and what do I know about the limits, conditions, and coverages of the program?
⁃ Does our program have exclusions or conditions that would jeopardize business operations if a claim were to occur and not be covered?
⁃ How familiar is our staff with claims reporting?
⁃ Is our safety and loss control program up to date and free of potential OSHA violations?
And last but, not least, can my agent or broker provide our organization with the needed expertise and resources necessary to assist and service these and other areas of risk that have yet to be mentioned? With so many aspects related to the overall protection of a companies assets on the line, it only makes sense to move past the price element and look squarely into the eyes of your organizational exposures, employing the methods necessary in reducing the overall risk.