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“Insurance premiums are killing me!” “My insurance costs are the difference between operating in the red and in the black.” These are comments we hear all the time with new accounts. What are the best steps a business owner can take to keep these costs in check?
The first step is to be sure your current agent or broker is regularly marketing your insurance to other carriers; we recommend every three years, depending on the size and complexity of your insurance program. The biggest savings we obtain for new accounts is when existing insurance has been automatically renewed for years without being shopped. In these businesses we also find the worst disconnect between the insurance program and the actual business needs. This happens, not surprisingly, when nobody's paying attention. Reading this is a good first step.
In selecting how much insurance to buy and what kind, use a risk management priority scale which runs in this order:
Survive – make sure the business will actually be open next month or next year, and the year(s) after that.
Protect current profitability – make sure the business continues to make the same profit as pre-disaster.
Protect future growth – be sure the growth track the company is on is protected and even enhanced through smart risk cost control.
Selecting which coverages to buy versus the cost of insurance should be done with these priorities in mind. Don’t be insurance poor, but after a disaster, it’s critical that your insurance program reflects your needs. For example, adequate valuations of inventory, furnishings, IT needs and capital assets are important. Property insurance is often the least expensive of all insurance buys, so don’t skimp here. You can also manage these costs with higher deductibles. Insure what you can’t afford to lose.
Business income is a critical element to the “survive” question, and can allow for payroll to continue even after a business is destroyed by fire or other major disaster. You understand that your employees are your greatest asset and the face of your firm, so keeping employees employed and productive even when revenues have fallen off a cliff during the reconstruction phase will make the difference between survival…or not. with that said, if your business income will continue regardless of your physical location, you may be able to skip this.
Workers Compensation and Business Auto are the most sensitive to your own experience, so here is where steps with safety programs can lower your future costs (and enhance future profitability). Download our company auto safety program to make sure your employees are treating your vehicles as you’d like them treated, and see our workers' compensation page for similar resources there. Or, if the cost of workers’ compensation stresses your cash flow, contact us to join the movement to have your workers comp paid through your payroll service. It's easy to set up and avoids the cash flow pressure if the year-end audit is a surprise.
General Liability and Professional Liability can be significant expenses within your property and casualty program, and here is where matching the best carrier with your business usually matters most. Insurance companies move into and out of certain markets; take advantage of this trend by having your agent (or us) shop your insurance periodically. Don’t get stuck with a carrier that relies on "stickiness" for profitability (raising rates until you leave). One word of caution on Professional Liability: these are non-standard policies, meaning it's complicated to compare effectively. Any change should be done with both eyes open and only after professional analysis. Download our free comparison chart here.
The biggest elephant in the room is often Health insurance. While we have markets, experience and resources for groups with under 25 employees, we refer larger companies to specialists we work with. Here again, it pays to have your broker shop this every three years, or whenever a particularly large increase occurs. Consider plan design changes (everyone else has). If you are a larger group and need help in managing this huge expense, contact us and we’ll refer you to professionals that are seasoned in your business.
Insurance can be expensive; don’t let it be one of those expenses you pay just because you don’t have time or energy to consider options. Make informed decisions, and don’t hesitate to ask your agent (or us) to shop your insurance among as many carriers as possible. At Gordon Atlantic Insurance, our access to so many top carriers assures you of the broad market reach you need in a risk partner. To discuss your insurance program with a seasoned professional call us toll free at (800) 649-3252. Have a question or would like a quote? Click below.
