A common problem facing many CFO’s, Controllers, or Risk Managers (depending on who secures and procures the insurance program) is the difference between price and value. Many times, price is king. In today’s era of tight or diminishing budgets, decreased corporate revenues, increased cost of goods and materials, not to mention competition, it is no wonder that price is a true driving factor when it comes to insurance coverage. But not every dollar saved is may be worth the effort.
Let’s look at the rate of a risk versus the cost of the premium. I have seen cases where the rate actually goes down, but the premium increases prompting the buyer to look elsewhere for a better deal. Why? Because the rate reduction was not properly explained to the client. Now setting in motion a chain of events that are both time consuming and exhausting for the buyer.
Another example is related to risk control or safety services. Many carriers have resident experts in the field of loss prevention to help minimize losses. More often than not however, these resources are cut first by insurance companies or brokers looking to boost their bottom line resulting in a needed service that is now not available – all because of “cheaper” insurance.
The next time price and value are considered as part of your buying process, look no further than value. Ask yourself, what is the VALUE of your insurance purchase, not just the cost!