As a business owner, CEO, CFO, etc., one of your favorite times of year is insurance renewal time. (I’ll wait until the laughing has stopped.) It’s 120 days out, and it’s like piranhas feeding on a piece of steak. So you allow three or four brokers with the best pitch or the first to call to come in for a meeting. Now, here is where the renewal process has over time become routine and in a sense “on auto pilot”.
In the construction industry, your renewal process probably includes some of the following:
- Declaration Pages with the Premium Blacked Out
- Loss Runs
- Auto, Property & Equipment Lists
And of course…the lowest price gets the business.
Now it’s off to the races and the best part: brokers crying because they are blocked from the insurance market they want.
Think about this: The typical commercial broker will earn around 10% of the total premium, which might make them one of your highest paid consultants. (I use that term jokingly.)
I can always tell when I’m meeting with a prospective client new to the renewal process. Before I even hear, “How are you doing?” they have put copies of all the above information into a pile in front of me. When I start asking them questions about their business exposures that can lead to a loss; which exposures they want to consider insuring; which ones they want to retain or some they can actually avoid, I get the curious puppy dog head tilt.
What it comes down to, especially in construction, is that insurance has become a bidding process which doesn’t address the real cost drivers in your business. Bidding without controlling risk is putting a very small band-aid on what could be a large, gaping wound. The problem with this is that times are changing. If you are in an auto-bid process, you have missed an opportunity to control the Total Cost of Risk for your company and produce long-term cost savings.
So for your next renewal, ask yourself this question:
- Did this so-called professional risk advisor really try to learn about my business and our plan for the future, or is he just taking basic renewal information and hoping to come in with the lowest bid?
Any questions? Feel free to give me, Chris Warren, a call at 240-864-9143 or send me an email at WarrenCM@ecsinsure.com.