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As a business insurance buyer, you should demand risk-reducing services as well as lower insurance premiums.  Lower insurance premiums don’t mean you have to sacrifice service for the lowest cost, but you need to know the necessary strategies and tips that could lead to a successful insurance purchase.

Soft Market

The insurance industry continues to be in a “soft market”.  You have an opportunity to consider service as well as price.  Unfortunately, agencies may not provide ancillary services that can really set them apart from other agencies.  Selecting the right insurance partner is vitally important, with reviewing the offerings that accompany the insurance placement.

Insurance services are not utilized to their fullest extent for two reasons.  First, you didn’t request assistance with loss programs, risk control, or claims management.  Second, agents and brokers don’t offer them, cutting services to keep expenses to a minimum.

The difference between $1,000, $10,000, or $100,000 in losses may come from services offered

When the insurance market turns or “hardens”, prices will jump significantly.  Service needs will increase as you look for ways to keep claims down to offset increasing premiums.  Putting little thought into risk or loss control measures before the market turns, can result in uncontrollable premium increases.  I recommend talking with your insurance professional about services related to risk control, claims management, appraisals, actuarial analysis, and risk audit.  In other words, get started with reducing the cost of risk before its too late.  Other services some brokers provide include, but may not be limited to:

  • Loss analysis
  • Risk Control surveys
  • Open claims reviews
  • Property assessments
  • Industrial Hygiene surveys
  • Fleet program audit and review
  • Safety program audit and reviews
  • DOT survey
  • Environmental assessments
  • OSHA audits and assistance
  • Ergonomic reviews

Low Price Insurance Policies-You Get What You Pay For

Limited service is one potential issue with cheap premiums.  Others include limited coverage or sub-limits, reducing the amount of insurance in place.  With lower limits, you risk contractual non-compliance with vendors, customers, or leases.  In short, don’t let the low price blind you from making the right choice of insurance carriers and jeopardizing active contracts.

Tips for making the right choice on price and service for insurance programs

  1. Request a marketing matrix that details the insurance carriers approached and the result, i.e., declined, accepted, etc.
  2. Review the exclusions attached to the insurance policy for key coverages that may be minimized or eliminated.
  3. Ask if sub-limits have been added to the policy if the premiums are well below other quotes.
  4. Consider the insurance company rating.  Check to see that it is A+ or better.
  5. Verify the information provided, ensuring lower numbers of payroll, property values, or revenues were not used.
  6. Check the deductible accompanying the quote to make sure you know what is expected in the event of a claim.

If the agency or broker does not offer these points and has the listed services, it may be time to look for an insurance brokerage that does.

Brian S. Smith, CIC, ARM