Are you a business owner tired of navigating the confusing insurance marketplace or using multiple brokers to get the best deal? Learn how working with a single strategic broker can save you time, money, and effort while ensuring you get the best deal possible.
In this video and post, I’ll share with you the information your strategic insurance broker should be including and why in your next renewal submission to get the best results.
If you haven’t seen my video on why you should be working with just one broker who is strategic and not just like every other broker.
You can watch that here: Business Insurance – Why Using One Broker Gets The Best Results
Okay, you’ve adopted the thought process of working with just one insurance broker to go out to the marketplace to secure your next best renewal deal and now you need to know what the submission to the market should look like – and here’s a clue – if you need to tell your broker this info, you’re probably not working with a strategic broker who can get you the best results.
So let’s start with answering the question, what is a submission?
For most brokers, a submission to the marketplace will include a set of ACORD – industry standardized application forms, some supplemental forms, and your loss history. This will be emailed to each of the underwriters you want to get a quote from.
Unfortunately, this typical submission starts the process of getting the best deal off in a weakened position. It’s a basic amount of information for an underwriter to make key pricing decisions from, and it lowers your leverage to about a 5 out of 10.
To get the best results your underwriting submission needs to be packed with the reasons why your firm stands out from your peer group and the hundreds of other submissions on an underwriter’s desk at any one time.
It is here that you get to tell your story about your company culture, your risk control processes, your safety meetings, your investments in safety and claim reduction activities, and more.
Here’s what happens when your submission hits an underwriter’s desk.
First, they take a look at your loss runs which is a five-year history of every claim you’ve reported to your current insurers. They are looking at both the frequency of claims as well as any severe or serious claims.
Later they will ask your broker for more details on certain claims – especially the severe ones. I’ll circle back to this in a minute.
The next thing that the underwriter does is look at your website. They are looking for potential exposures not disclosed on your applications.
Often they will find what you may consider some mild embellishments to the scope of your typical work and freak out.
Here are just two recent examples I’ve dealt with:
The first was a fencing contractor that showed pictures of heavy equipment doing grading of land, landscaping, and hardscaping around pools and such. The fact is that those types of operations were totally subbed out and not those of the fencing contractor, but the underwriters did freak out, and walking them back from their initial concerns was nearly impossible.
The second situation was a manufacturer who worked predominately in machining parts for the automotive industry but the website included photos of military equipment and indicated they were an approved Department of Defense Contractor. The fact was that they had never bid or fulfilled a DOD contract, but again, that freaked out the underwriters sufficiently to the point where the best deal was out of reach.
The point here is that if you’ve embellished the scope of your work or included what is really sub-contracted work on your website it should be removed prior to going to market and focusing on what you do, do.
Going back to the loss runs – it’s normal for a firm to have claims – after all, that’s why you buy insurance, but what I suggest is that prior to going out to market, you and your broker comb through the 5-year loss history and identify the cause of each claim you had and indicate the steps you’ve taken to prevent that claim from occurring again.
Never done this? You should, it’s a good exercise and what we do is provide a “steps-taken” narrative with the loss runs in our submission. It shows an underwriter that you are proactive and that you understand the relationship between claims and the price you’ll pay for insurance.
The other issues to provide in your narrative may include: Your OSHA 300 posting log, copies of your written safety and health program, a copy of your product recall plan (if you’re a manufacturer or distributor), your fleet safety and management plan, possibly your financial statements, your risk transfer program you deploy with vendors and certificates of insurance from your prime vendors.
Finally, I include a written transmittal letter that lays out for the underwriter why we are going to market, my thoughts on the client’s story, how I will be engaging with the client in terms of risk control support, what my pricing expectations are, etc.
I’ll also give the underwriter my pricing deadline. I am very clear that we expect their quote returned to me by the date I have agreed to with the client – typically three weeks prior to expiration.
This will give me time to evaluate and complete my negotiations well prior to renewal.
Now, while I have set expectations, it’s just as important for me and the client to respond to requests for additional information or risk control inspection visits made by the underwriters.
It’s a two-way street and I encourage my clients to be responsive and respectful of requests and timing.
So, we get to that three weeks prior to the expiration deadline and the quotes are in and fully negotiated back and forth.
What should you expect from your strategic broker?
A strategic broker should now prepare a proposal that is concise and communicate on a very high level the coverage issues and includes the results of the pricing from all underwriters received, even declinations.
With a matrix of the market results you can clearly see that your broker did the job they were hired to do.
Then the recommended program is featured and why it was selected – it may not be the lowest price so a brief discussion of why should be included.
Attached to this summary will be the actual proposal from the underwriter which usually provides all the details as to the coverages and options quoted.
After the review, if you agree on the recommended plan of action you request your broker to bind that program, pay the deposit premiums and get any remaining subjectivities cleaned up.
From there renewal certificates of insurance should be ordered and sent to your cert holders prior to renewal.
Hopefully the time and effort you invested in the process results in coverage and pricing improvements and you walk away feeling satisfied and secure. Hopefully, you’re also less stressed out about the whole renewal process and the chaotic old process is not a thing of the past.
But, what if renewal goes up and is cost more than your expiring premium? Was it worth all the time and effort?
I would have to say yes it was. Sometimes external factors that drive the insurance industry will drive your premiums up and the strategic renewal process will help mitigate those increases and bring you a renewal that’s less than if you just “renewed as is” or engaged in bidding.
Here’s the bottom line – hoping for a successful renewal is not a strategy.
The more control and leverage you can exert through a strategic process the better off you’ll be.
Want to learn more about how I execute this strategic process?
Let’s connect and have a conversation – I promise, no hard-core selling or other insurance sales processes – this is an opportunity to see if we’d be a good fit for you and your business.
If you’re looking for a team of dedicated experts to work with on your next renewal, I’d love the opportunity to speak with you.