Price Shop Insurances

Christie, when I was involved in risk management , we used a trusted insurance broker, and they always more than paid for themselves. They were invaluable when we had a fairly aggressive acquisition strategy and with our Board. The right broker has the benchmarks, and knows the players at all the companies that write the coverages you need. I would rather have a great insurance broker than an inept risk manager. I know risk is way more than insurance, but brokers these days understand other aspects of risk management as well.

Also, you can find benchmarks if you look hard enough, risk management and insurance related associations have them, and real partners who write policies will share them with you. Also, you can go to risk management and insurance focused LinkedIn groups and seek input there as well.

Christie, I have handled commercial insurance purchasing at the companies where I've worked for many years. Whether or not you market an insurance policy or program in successive years depends on many factors, such as what the insurance market is doing, how your current premium compares to that of other insurers, whether your company has had important changes during the year or plans changes in the coming year, your satisfaction with the insurer, the insurer's financial status, and many others.

Price shopping every year can have negative consequences as well as benefits. Some potential negatives of annual marketing include: you give up better coverage terms for more restrictive terms at little savings, you do not build up any relationship with the insurer (which can be critical when something unexpected happens), the insurers get tired of working up quotes (especially if you don't change companies) and cease to be interested in your account, and the extra time spent on it may not be worth the money saved. For many claims-made policies, such as Directors and Officers liability, every time you change insurers you probably lose coverage for events that happened before the new policy inception date.

Along with your in-house risk manager, a good broker or risk management consultant can help you decide when it is a good idea to go to market as well as the extent of that marketing effort.

I would focus on the relationship with the broker. Two years ago our President decided with two months to go before renewal that he wanted to use the services of a broker friend for our medical coverages. Everyone (including the employees of the 'friend' broker) shuddered at the thought and dreaded the massive amounts of work required to get the new guys up to speed and vet the various options they brought to us.

We were shocked when they brought some of the same packages to us with better rates than our prior broker was able to negotiate. They offered us different options for the same coverages and explained the short/long term ramifications of our decision. We chose the same insurance carrier the prior broker brought to us with a further 8% reduction from the original reduced rate. We also found out that we could get access to our records far earlier than the prior broker told us we could, which allowed us more time to analyze and make our decisions. They have remained the primary go-to people for any issues we have and are prompt on their response. They are also proactive when it comes to our account. We have meetings throughout the year highlighting issues that might impact future renewals and offering suggestions for ways to mitigate risk further.

A good broker will stay on top of your account and have work experience with multiple insurance carriers to aid you in getting the best coverage possible. Each year, they should bring more than one option and be ready to explain the differences. The added cost of the broker is miniscule to the amount we pay and save working with them.