Due diligence. It’s not a term you hear a lot about when it comes to buying business insurance. And for manufacturers the whole process of buying insurance can be a difficult and time consuming process.
What is the due diligence approach to business insurance? How can manufacturer’s benefit from this approach?
I’m going to answer those questions and more in just a moment.
So what is insurance due diligence?
Insurance due diligence is a different way of buying your business insurance from the traditional process that is often characterized by having multiple brokers competing for your account in what is known as shopping your insurance, or bidding it out.
Many manufacturing company owners think that by introducing multiple brokers to the shop their insurance around, competition will drive down the price they pay.
Unfortunately that is just not true – it may have been true 30 plus years ago but it is not true today for one primary reason.
That is that every insurance company will only release their quote to one broker, and most skilled and qualified brokers represent all of the good insurance companies. Having multiple brokers attempt to quote your account is fruitless. If you’ve done this in the past you’ve seen the confusion, frustration and wasted time, plus undesirable results.
The due diligence process on the other hand is much more strategic and focuses on three things:
- Getting your insurance program coverages correct from the beginning,
- Selecting the most qualified broker to lead that charge, and
- To strategically approach the marketplace to achieve best pricing results.
These objectives cannot be achieved when an uncontrolled free-for-all bidding process is in play.
What does that strategic market approach look like?
It’s going to vary with each account, but it’s goal is to make your account as attractive as possible to the underwriters in the marketplace, especially from the perspective of claims history and risk controls.
If your claim history is superior – then we’re going to “sell” that to underwriters as a huge strategic advantage, but we’re also going to help you back up that good loss history with risk control tools that demonstrate your commitment to safety and risk management.
The bottom line is that the biggest determinant in an account’s pricing is their claim experience. Accounts with consistently good claim histories always outperform those accounts with marginal claims history from a pricing perspective.
And, when good claims histories are backed up with documented proof of how you outperform your peer group, you’ll do even better price wise.
Here’s the best part of due diligence for you as a prospective client.
We can do the coverage review, the loss history analysis, and pricing benchmark without disrupting your existing broker relationship. We’re not out shopping the market, and it’s entirely confidential.
You’re going to learn a few things here.
- Your coverages are up to date, or they’re not.
- Your claims are “in-line” with your peer group – or they aren’t.
- Your pricing is or it’s not in line, as well.
Again, all confidentially and this diligence review can take place any time during the policy term, not just during the renewal season.
Prospective clients who have gone through our due diligence process tell that we’ve made it easy for them to make more informed decisions, in a calm and professional manner.
No more rushing to the finish line, no more wondering if they got the right coverage or not. The end result is the peace of mind they’re ultimately looking for.
If this is the sort of relationship you’re looking for from your insurance broker, then why not give me a call and see if we might be a good fit for your manufacturing company.
We work across the U.S. and I’d welcome your call. Reach out and let’s chat, I promise no high pressure sales tactics or anything like that.
Thanks!
