How to Get a Better Insurance Outcome
What Can Companies do Today to get a Better Insurance Outcome?
The insurance market is hard and becoming more difficult. The million-dollar question is, “what can a business do to get the best possible insurance outcome in today’s challenging insurance environment?”
We all know that repeating the same activity over and over again, yet expecting a different outcome is the definition of insanity. And that would apply to taking the same old approach when it comes to the management and financing of risk.
Businesses need to gain more control over their risk financing and to a large degree become their own underwriters. Know the what, why and how of underwriting.
Companies are used to competition. They compete for market share; they compete for sales; they compete for drivers; and today, they must compete for underwriting capacity. Unlike in the past, you cannot wait until your traditional insurance renewal cycle to begin.
A colleague of mine, Bert Mayo, tells clients all the time that “no one tells your story or spends your money like you do,” which is so true.
The leaders of companies must get even more involved in the management and the financing of business risk.
To assist businesses in the development of a strategy to gain more control over their insurance situation, I pulled together a top 12 list.
Twelve Things You Need to Do to Take Control Over Your Insurance
- First, you must seek out strong and specialized insurance and risk management partners. For they will have the best ideas, tools and underwriting relationships.
- Next, it is important to re-assess the foundation that your business is built upon, which is your legal structure. At a time where you may not be able to afford or find as much excess insurance as you need or want, this becomes critical. Businesses face more very large claims than ever, and often with less limits of protection than before. Ensuring your legal structure can weather an attack is essential.
- Be prepared to communicate your unique legal, capacity and operating structure and consider insurance matters when making those decisions.
- Build a set of what I like to call “walking papers” from your best commercial slide decks to tell your story. (Do not rely on someone else, insurance applications and loss runs to do so)
- Invest in underwriting relationships in the “off season.” (Build momentum towards an event – your renewal)
- Own your data, lessening your reliance upon insurers and agents.
- Establish a set of KPIs at 3 levels (Enterprise, Middle of the Business & Driver) then manage to them.
- Align Operations, Financial and Risk/Safety Performance Strategies based upon KPIs and tie them to Compensation. (everyone in the organization should know that it “pays” to be safe)
- Use analytics, benchmarking, and other tools to know what you should pay for insurance and have realistic expectations.
- Tell underwriters what you want, based upon sound logic – do not just let underwriters tell you what you can have; empowering your broker to negotiate from a position of strength on your behalf.
- Pursue multi-year deals where possible.
- Focus on Total Cost of Risk not just Fixed Cost. (Retain the risk you can control and afford, transferring that which would impair the business).
Hard markets are a chance for good businesses to gain a competitive advantage.
Someone is always getting a good deal on insurance and someone always gets the best deal. You would be shocked by the range of rates similar businesses pay. Taking these steps, proactively, can help ensure that your business is getting the best possible outcome.
J. Daniel Cook, CPCU, CIC, CRM, ARM, AMIM, AAI, TRS
Principal & Practice Leader
National Transportation Accounts - Strategic Risk Financing – M&A Support