It can make a difference: Take Charge Of Your Insurance Program
By Joseph E. Rueter, CIC CPIA, CRIS
With far more risks, coverages, and complexity, spending time reading a business insurance policy isn’t on many radar screens. Take cyber liability, for example, and then there are the endless complications of doing business overseas, along with employees traveling and working abroad.
There’s a lot more. With global outsourcing, U.S. businesses are more dependent than ever on overseas suppliers. This raises a major issue of what happens if a supplier can’t deliver as planned. And, then there’s data security, or more to the point, data theft. The huge breaches make the news, but many systems are being compromised.
If there are disgruntled employees, workers’ compensation claims go up, as they often do when layoffs are announced or when trying to avoid health insurance deductibles. Then there’s the issue of interstate work and workers’ comp. Meanwhile, the EEOC’s 2015 stats reveal significant increases in retaliation claims, as well as rises in disability and harassment charges.
Clearly, there are far more risks today with a potential for significant losses. And then, there’s the cost of insurance. If you add the fact that insurance is more complicated than ever, the situation becomes utterly confounding. Unless a company has a competent in-house insurance buyer, it’s dependent on the suggestions and guidance of an insurance agent. Few companies are comfortable being in the dark when it comes to the future of the business or their money. Yet, insurance involves both.
Here are a few basic guidelines that will help you take control of your insurance program without getting bogged down in trying to be an insurance expert.
- Focus on loss control. When all is said and done, eliminating losses is the most effective way to solve the insurance problem. Fewer claims send the right message to your insurance company. And big claims hurt less than an endless string of small ones.Some businesses don’t ask for loss control help from their agent or insurance company. Some worry about what an outsider might find, while others are afraid that any deficiencies may be costly to correct.
Claims are costly and the price is paid in higher premiums or, worse, in having the insurance cancelled.
- Expect your insurance agent to know your business. While there are certainly many similarities among businesses in the same industry, the way individual companies do business, operate, maintain their facilities and equipment, and regard safety differs widely. It’s this disparity that can make a difference when it comes to insurance.If a company operates according to industry standards, then it wants its insurance agent to know it so the agent can communicate to the insurance company’s underwriters. The more an underwriter understands an insured’s practices, policies, and operating standards, the better.
The other reason your insurance agent needs to know your business: to identify actions that can help reduce or mitigate risk. The agent can draw upon an insurance company’s resources to assist in this process.
- Make sure you’re with the right insurance company. Most businesses assume their insurance agent places them with the most appropriate insurance carrier. This is not always the case. Insurance carriers have appetites for certain classes of businesses at various times. This can and does change. At one point, a carrier may offer very low rates to attract a particular industry, and within a year announce that it’s exiting that particular class of business or is not renewing existing accounts.While agents can’t foresee what an insurance company will do in the future, they should know the history of a company with various classes of business. At the same time, it’s important for an agent to have access to insurance markets with an appetite for particular types of business. If not, you can be at a disadvantage by having underwriters who aren’t familiar with your industry. The result can be either too much or not enough coverage to adequately protect your assets.
- Expect your agent to shop your account. Because insurance companies can change their underwriting guidelines and rates, an insurance agent should “shop an account” to make certain it’s placed with the most appropriate insurance carrier in terms of both coverage and cost.Even so, there’s value in building a relationship with a specific carrier, one who understands your business and develops a comfort level with it. While that has merit, the flip side is equally important. If the agent has a thorough understanding of your business, then it can be easier to position it with another carrier.If moving to a new carrier means improved coverages, broader services, and good pricing, it may make sense to move the account. The best way to be sure is shopping it.
- Be open to recommendations. While no one wants to pay more for anything, including insurance, you should expect your agent to make recommendations for covering previously unrecognized exposures.Employee Practices Liability coverage is a good example. Agents should point out to clients that their business insurance policy might provide minimal coverage (usually $5,000) or none at all. A $5,000 figure is useless in light of both the legal costs and the settlements that various types of hiring, firing, age, gender, and racial discrimination claims demand today. Without proper coverage, you are in fact self-insuring, and you could face a $50,000 to $500,000 or more settlement or judgment.
Your insurance agent should be making appropriate recommendations for protecting your assets.
- Expect a high level of service. Many insurance tout their “great service” to promote themselves. Efficient service is a must, but it doesn’t level today’s playing field. Of even more value is the agent’s level of technical insurance knowledge and willingness to take a hands-on approach to understanding a client’s business operations.Some agents are extremely knowledgeable and are backed up by a competent support staff. However, the size of the agency, either large or small, doesn’t guarantee a high level of competence. It’s always good to obtain several recommendations from colleagues you know and trust.
While these guidelines cannot guarantee satisfaction, they can serve as helpful benchmarks for taking charge of you insurance program.