RISK ROUNDUP—Commercial insurance renewals come around once every year just like Christmas. Of course, renewals aren’t as much fun as a major holiday, but they can be similar in one way—sometimes they can be stressful.
So, we’ve gathered some information to help you get started (and motivated) for your next renewal.
This three-part posting includes:
- A quick Renewal Overview for small businesses;
- A Risk Management Breakdown of the renewal process for mid- to large-sized businesses; and
- Examples of renewal information (lists and schedules).
Contributors for this special Risk Roundup include American Risk Managers Vice-President Jessica Spears, who wrote the Renewal Overview, and American Risk Managers Company Founder, Owner and Chairman Walter Haney, Sr., who penned the Risk Management Breakdown.
When getting ready for an insurance renewal, one of the first things to do is to start gathering the information you will need to provide to the insurance company.
This information consists of the following: locations with values; schedules of your electronic data equipment and inland marine equipment; lists of vehicles; lists of drivers with license numbers and dates of birth; payroll; sales; and loss runs.
Once you have all of this information gathered, it is best to sit down with your current agent and discuss expectations and the market place.
After this conversation, you will be able to determine if you should have a negotiated renewal or go out to market.
It is not recommended to take your account to market every year. It devalues your account. We suggest looking at it every three to four years, unless there is an issue which leads you into the market sooner.
After this meeting, if you decide to work with your current agent on a negotiated renewal, you will need to give them all of your updates and fill out any applications, etc., needed for the renewal.
If you decide to go to market, you will need to determine which agents you would like to include.
Once that decision has been made, you will need to request a list of markets from each agent in order to assign markets. This keeps multiple agents from going to the same market and shutting it down.
After you have assigned markets, you will be ready to send out the bid specifications to all the agents bidding. They will come back to you throughout the process with various questions, applications, and additional information that they may need.
At the end of the bidding process, you will need to review all submissions and compare them apples-to-apples before making a decision.
This will consist of going back to them with questions on things that one agent might have included in their presentation and one did not.
Once you have made your decision and awarded your business to the agent of your choosing, make sure to review the binders for accuracy. You will also need to do the same with the policies once you have received those.
Renewals: The Risk Management Way
The single most important project that American Risk Managers performs for its clients is the creation of “Bid Specifications.”
This document forms the basis for the insurance to be purchased for the following year.
Bid Specifications are a compilation of all the information gathered for the individual company—to include descriptions of all properties, vehicles, sales, payrolls, losses, and any other pertinent data—as related to the individual client.
If this renewal is to be a competitively-bid placement, American Risk Managers (ARM) will request a list of preferred markets from each of the bidding agents. When these forms are received, markets will be assigned on the basis of the agents’ preference rating.
Agents of Record Letters will then be prepared to assign each insurance company to a specific agent.
All underwriting information will be provided as a portion of these Bid Specifications and ARM will continue to provide updated information for the client to each of the bidders.
All appointments, surveys or other information will be provided by the bidder, coordinating his needs through ARM.
ARM will also arrange the timing and presentation from each bidder.
Upon the completion of all presentations, ARM will provide a spreadsheet detailing all the proposals, so that management is provided with a basis for making a sound business selection.
ARM will assist clients in the placement of the insurance and will review all insurance binders and insurance policies to ensure that the coverage complies with the Bid Specifications.
No Bid Basis
If the coverage is being renewed on a “No Bid Basis,” the procedure is the same, with the exception of selecting agents, their markets, Agent of Record Letters and other attendant duties enabling multiple agents to furnish quotations.
All other preparatory measures are taken to ensure that all exposures are covered or are self-insured in the full knowledge of the insured.
Schedule & List Examples
Property Schedules can include a vast amount of information. Four basic types of information include Location Address, Year Built, Type of Construction and Square Footage.
Electronic Data Equipment Schedule
For Electronic Data Equipment, information should include Equipment Name and Number, Serial Number, and Equipment Location—such as your main office, branch name or other facility.
Inland Marine Schedule
For Inland Marine (Contractors Equipment that moves from place to place), information should include Equipment Name, Location, Date of Purchase and Value.
Vehicle Lists can also include a lot of information, including a designated Vehicle Number assigned by your company. Three other basics are Year/Vehicle Type, Cost, and Serial Number.
Drivers Lists usually include a designated Driver Number, Full Names, Dates of Birth and Driver’s License Numbers.
Regarding the other information needed for your renewal:
- You will provide an amount for “expected payroll;”
- You will provide an amount for “expected sales;” and
- You will obtain loss runs from your insurance company.
Good luck with your next commercial insurance renewal.
Hopefully, the advice shared by our Risk Managers will help save you some time and worry.
AND if you’re interested in saving money—most Independent Risk Managers can find enough savings for you to more than cover their fees.