Archives for January 2019
RISK SOLUTIONS—Your company probably just renewed its commercial insurance policies in January, unless your renewal date is in July.
Property and Casualty insurance premiums are big bills to pay—usually the third-highest cost associated with doing business after payroll and supplies.
So, you were alerted that it was time to renew and you renewed.
Did you get a better insurance rate? Did you get a lower premium than the previous year?
Did you even know that a company has any power at all in these situations?
Well, if you had an Independent Risk Manager working with your company you wouldn’t have to worry about any of those concerns—you’d get plenty of “bang for your buck,” plus a whole lot more.
But, let’s say you don’t have one yet. What else can you do?
How about we just interview a 40-year-veteran of the Risk Management World and ask him for some tips? Why not?
Here are five insurance renewal cost-saving tips from Walter Haney, Sr., the founder of American Risk Managers, that you can use for your business.
Insurance Renewal Rate & Premium Reduction Tips:
1) Bid out your insurance account;
2) Negotiate a pre-renewal rate reduction;
3) Review coverages and remove items that do not require insurance;
4) Delete unneeded or previously required coverages after mortgages are satisfied; and
5) Increase deductibles for large premiums and low loss coverages.
Before we explore more about these tips, be aware that Mr. Walter has provided this information on an “opinion only basis.” He strongly urges persons to seek expert advice for the best results.
“The simplest and surest way to achieve the results that you’re looking for—more coverage and less premium—is to hire an Independent Risk Management Consultant,” he noted.
Bidding Out Your Insurance Account
To bid out your insurance account, you’re going to need to provide some pretty detailed specifications, complete numerous applications, determine which agents to include, and assign markets.
But… before you do all that, you might want to review this posting regarding setting proper limits on your commercial property insurance.
During the bid process, you may also have to answer numerous questions from all the agents involved, as each company has different procedures.
Lastly, after receiving your policies from the company of your choosing, make sure to check your new insurance policies to ensure that they match all of your specifications.
Negotiating Rate Reductions
If you meet with your current insurance agent to discuss a possible rate reduction, make sure to explain that you’d prefer to receive a rate reduction in lieu of bidding out your account.
Some agents may say there is nothing they can do about your rate—until faced with competition. And then, not-too-surprisingly, a little room may be found for reduction.
Also, remember that “business is business.” Don’t just stay with your current insurance agent because he is your golf buddy.
And, although 50% of our clients ultimately remained with their current agents after a bid process (that STILL got them a lower rate), that means that the other half of our clients moved on to “greener agent pastures.”
Again, Mr. Walter noted, “You might want to look at the employment of an Independent Risk Management Consultant, simply because they will know how much you should ask for. They won’t leave anything on the table.”
Reviewing & Removing Items
You would be amazed at how much money some businesses spend on paying premiums for items that don’t actually need insurance coverage.
And nearly just as many times, we find overlaps in coverages—where items are listed on more than one type of coverage—meaning you are needlessly paying double the amount you should be paying.
But let’s return our focus to reviewing and removing items that do not require insurance.
“For instance, vehicles that are currently on the automobile vehicle listing, but are parked and never used—need to be removed,” said Mr. Walter
“By the same token, vehicles that have depreciated (accumulated enough age) that their value is not worth replacing—it’s not worth it to insure them.”
Mr. Walter also noted that, even if vehicles have depreciated to the point of no real value, businesses should still keep liability coverages.
“Any vehicle that goes off the lot and is on any public road or private road—anything other than company premises—needs to be insured,” he said. “I would just remove physical damage and keep liability.”
Deleting Unneeded Coverages
Another way to save money on insurance costs is to delete any coverages that you no longer need or are no longer required to have. (Banks require insurance coverage until loans are fully repaid.)
“You could look at items that have been insured, but that have no real exposure to loss and remove the coverage on them,” Mr. Walter said. “If you’ve got block or metal objects—items not likely to be destroyed—you could consider not insuring them.
“With other insured items, if you have mortgages on them and the mortgage has been satisfied, you are not required to keep the insurance.”
An example of a mortgage-free situation might be your company’s delivery fleet—after all the vehicle loans have been paid.
“If you have a large fleet of vehicles—tractors and trailers—you might choose to insure those against a catastrophic loss and assume the responsibility for the payment of a single vehicle loss,” Mr. Walter said.
“Let’s say your current automobile premium is $600,000 or $700,000. By going to a catastrophic loss policy, you might reduce that premium to $100,000. That leaves you $500,000 or $600,000 to pay for any losses that you have on those vehicles.”
Increasing Certain Deductibles
If you have large values of property and your policy has a $5,000 deductible on it AND you have low loss levels, Mr. Walter said you’re really not getting any real value for your money.
“For instance, if you have a building that’s worth $1 million, and you have contents (machinery and equipment) that’s worth $2 million, and raw materials and finished goods in there worth $3 million—all at once, you’ve got $6 million in property exposure there,” he noted.
“And, if you have low or no losses, we can probably find you significant savings in all those areas.”
Using just the building coverage as an example, Mr. Walter explained, “Let’s say we’ve got $5,000 deductible on the $1 million building and we’re paying—just for property—we’re paying about $25,000 in premium.
“If we make the deductible $50,000, we could end up paying 50% less in premiums, which would equal $12,500. And that’s just one year’s savings.”
(Explanation: Premium of $25,000 divided by 50% equals $12,500, resulting in a new premium amount of $12,500—or $12,500 LESS, which is half of your original premium.)
But that’s not where the savings ends when a professional is helping you find even more ways to cut business insurance costs.
“Then, of course, you’ve got all the other policies to consider,” Mr. Walter noted. “You’ve got general liability, fleet coverage, umbrella policies and business interruption. You have a whole bunch of policies in there, but some of those you won’t want to apply a deductible to.
“You only want to apply higher deductibles to large premiums and to low losses.”
Mr. Walter also noted that deductibles of more than $50,000 can also be applied to some policies.
“Well, you would just price it up,” he said. “Anywhere from $50,000 to $100,000 to $250,000. You just move up the ladder on the amount of the deductible and the insurance company will give you a price for it all the way up. And you’ll hit a point to where that’s what you ought to take.”
Risk Management = Less Risk And Best Results
Mr. Walter has already noted that—for the best results—you should get help from an Independent Risk Management Consultant.
“They’ll be able to find even more savings in all of these categories,” he said. “You’ll obtain the best results in rate reductions, premium reductions and have LESS RISK OVERALL for your business.”
What The Pros Know
Mr. Walter also gave us several reasons why having a professional bid out your company’s insurance account is a great idea.
A Risk Manager:
- Will be able to help you pick the brokers that you’ll need—brokers who are aware of the coverage needs of your particular industry;
- Will know a number of brokers that are large enough to handle the account and who are well-versed in the type of insurance that you will need and its requirements;
- Will be able to draw up bid specifications, help you with the selection of brokers and furnish the brokers with the required underwriting information;
- Will handle the bid process for you, and at the completion of the process, design a spreadsheet that will tell you exactly what you’re being offered; and
- Will order binders and upon the issuance of the policies, will review the policies to make sure that you’ve bought what you wanted to buy and that you’re paying for what you thought you were paying for.
By handling the bid process, Risk Managers will not only save you money, but also an enormous amount of time. And they provide you with the peace of mind that you’re completely covered—a very valuable asset.
“Most business owners and managers are just not well-enough versed in the insurance terminology and insurance underwriting requirements needed to go through the whole bid preparation and process necessary to make sure that you don’t leave out something,” Mr. Walter said.
‘If you leave something out, it won’t be covered. And it can be devastating to your business to have an uninsured claim.”
YOUR Best Interests
Mr. Walter always has YOUR best interests in mind. That’s why he’ll always recommend hiring an Independent Risk Management Consultant.
And that’s why he created American Risk Managers—to help businesses just like yours and to advocate for them in the Insurance Marketplace.
“Only truly independent firms will have your company’s best interests at heart,” he said. “Companies that SELL insurance are not truly independent.”
If you’d like to learn more about risk-reduction and cost-saving, Mr. Walter has four decades of Risk Management experience—and he loves to share.
“I’ve provided some simple tips here that any company can understand and implement,” he noted. “I hope you find them helpful in your next renewal.
“But there are many more ways we can assist in negotiating rate reductions, reviewing coverage needs, checking for gaps or overlaps, determining safe deductible amounts, and getting you lower premiums. So, give us a call.”
Let An Expert Review Your Insurance Rates & Premiums!
(Photo Credit: Pixabay/Pexels)
RISK EDUCATION—Start the New Year off right with these great tips for reducing some of the risks for your business. And since “Safety Is Always First,” the first half of our resolutions will focus on safety.
- Hold monthly safety meetings.
Safety meetings clear the way for your people to be safer and for your company to be more profitable.
- Double-check all your equipment from a safety standpoint.
One company changed the type of ladder they were using and decreased accidents (and Workers’ Compensation claims).
- Encourage employees to report any and all areas of potential danger.
As the “boots on the ground” in your factory and the “hands-on machine operators,” your employees are often the best source for spotting possible problem areas.
- Set up safety awards banquets.
Create meaningful awards that recognize employees for successfully handling safety-related situations.
Certificates are okay, too, but being recognized as part of the company’s makeup—and from a consensus opinion of the workforce—has the most meaning.
- Include non-management participation in all aspects of your safety awards.
This includes the creation of the awards and choosing the recipients.
Obtaining feedback and participation from non-management employees is a vital step in making these awards a success.
- Set up “Early Back To Work Awards” for employees who’ve suffered on-the-job injuries.
This type of award would be given to an employee who returned to work as soon as they were released for work by their physician.
- Post a No Harassment (of any kind) Notice.
Many employees will follow leadership examples on this issue, so make sure your company’s attitude starts at the top.
Some companies are also seeing great benefits from promoting “Mindfulness” education and activities.
- Encourage breaks. Research shows that employees who take regular breaks are MORE productive.
Employees with time cards usually have scheduled 15 minute breaks each morning and afternoon.
Staff employees may not have scheduled breaks, so encourage them to self-monitor a few minutes of downtime to recharge their batteries a couple of times a day.
- Offer free English classes to any employees who are non-native English speakers.
Check to see if there are any state-funded programs in your area. English classes increase employee retention rates (and morale).
Some companies even offer added motivation in the form of a few cents an hour raise to employees who complete certain levels of their programs.
- Sick Employees? Create an atmosphere where “staying home to avoid spreading germs” is encouraged.
Your company will probably avoid more lost productivity from other employees getting sick.
And your employees will also appreciate the protection from contagious sicknesses they would then take home to their own families.
For More Tips On Reducing Risk – Give Us A Call Today!