Tips to Improve Insurance Program

Given are tips to improve insurance program.

Minimize the Variability of Insurance Costs

A key goal of any good risk management plan is to keep insurance and other costs of risk low and less variable, with fewer and less extreme peaks and valleys. Insurance rates can vary 100%, 200%, 300%, or even more from the top of the cycle to the bottom. Plan for this by budgeting at the top end of the market.

Keep your Company’s loss Ratio Low

A loss ratio is a premium paid divided by the cost of claims incurred. When renewing a policy, or shopping around for other insurers, an insurer will look at your loss ratio. A low loss ratio will make your company attractive to insurers, which will result in competition over your account and lower premiums.

Work on Becoming a Coveted account to Insurers

Insurance companies can only underwrite a limited amount of business based on factors such as their net worth, claims reserves, experience, type of insurance, etc. Since an insurer can only insure a finite amount of risk, they will choose what they feel to be the most profitable risks to insure.

Choose Deductibles that result in the Optimal cost of Risk

The general principle is the higher the deductible, the lower the premiums. By analyzing past losses in conjunction with insurance premium quotes for different deductible options, it becomes clear which deductible is best. A maxim in risk management is don’t insure losses that you can predict and afford to pay.

Make sure your values and Property limits are Accurate

Do not over or under insure! Either way, it could cost you money. Make sure that the values you report to the insurance company are accurate. Accurate values and limits mean you are adequately covered, but that you aren’t paying an excessive amount.

Make Premium Payments on Time

Most cancellations are for non-payment of premium, so make sure your payments are on time. You don’t want a cancellation due to non-payment of premium on your record. In most cases, cancellation is made effective at the time of the cancellation; however, an insurer can also void a policy as if it never existed. If a policy is voided, then it is possible to deny any claims that happened during the policy term prior to the cancellation/voiding.

Examine how you Pay your Broker

Find out how your broker gets paid for their services and how much. Some may have flat fees or may be able to provide competitive pricing. When shopping around for a new broker, consider the services that they provide as well as the commission that they receive.

Utilize your Insurance Broker’s Services

Most businesses do not fully utilize the services of their broker. Ask your broker what services they can provide in addition to the ones you currently receive. There are many things your broker can do to help you, which may already be included in your fees.