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Insuring proactivity
Five ways to get control of costs
The forecast for 2007’s insurance market remains cautiously optimistic with more insurance companies willing to compete and broader coverage terms being offered.
Small businesses have struggled with the increased cost of insurance for several years. The forecast for 2007’s insurance market remains cautiously optimistic with more insurance companies willing to compete and broader coverage terms being offered. It is recommended that owners review existing risk management programs and re-evaluate initiatives for reducing their overall cost of risk.
1. Select an agent that specializes in hospitality.
In today’s market, you should work with an insurance broker who understands your business and specializes in your industry. A hospitality insurance expert is well-versed with the many creative ways you can control your claims and insurance costs. Furthermore, this expertise is a valuable tool in promoting the awareness of national claims trends, specialized loss prevention tactics, and the newest insurance products available in the marketplace.
2. Begin the renewal process early.
The insurance renewal process should typically begin 90 to 120 days prior to the policy expiration date. Insurance companies traditionally request a multitude of information, including management experience, historical claims experience, property valuations, copies of safety manuals. Experience has proven owners who take the time to provide complete information will be rewarded with the best pricing and coverage available.
3. Don’t competitively bid your insurance every year.
Periodically companies will conduct a competitive bid process engaging multiple insurance brokers. A competitive bid process should not be undertaken annually; rather it should be initiated every three to five years. Companies that competitively bid their insurance with multiple brokers each year create a reputation that sours most underwriters and prevents them from offering their most competitive quote. Underwriters do not want to waste their time underwriting an account that will likely leave them the next year to save a dollar. This illustrates to the insurance industry that your company has no loyalty and relies strictly on bidding to control their insurance costs.
4. Conduct a market assignment.
When conducting a competitive bid process with multiple brokers, it is best to assign insurance carriers in order to maintain control. Assigning insurance carriers will prevent multiple brokers from soliciting quotes from the same insurance company. Request that each broker provide a prioritized list of companies that they would like to work with. If more than one request for a particular carrier is received, then ask each broker to provide compelling reasons why they should be awarded the company in question.
5. Reinforce your adherence to safety.
The insurance renewal process provides an opportunity to reinforce your company’s risk management philosophy to the insurance marketplace. Taking the time to provide all safety-related documents and/or procedures, as well as making yourself available to speak with underwriters will positively affect your pricing and coverage. This will further illustrate your company’s commitment to safety and proactive approach to risk management.
William H. Shea is a senior risk consultant for the National Hospitality Division of Wells Fargo Insurance Services in Clearwater, Fla. He can be reached at bill_shea@wellsfargois.com.
