We’ve been in a historically long hard market. The hard market started in late 2017 and has lasted much longer than the typical 1-2 year cycle, where a soft market typically takes its place. Insurance carriers are getting inundated with submissions from more than they can handle. In some cases, they can name their price. In others, it’s still a competitive market. The key is getting your submission to the top of the stack to stand out, which means better pricing, more timely proposals (not at the last minute) and better coverage.
“Help Me, Help You!”
Jerry Maguire made that phrase famous, and it’s very applicable when attempting to secure a competitive proposal from an insurance company. Nothing puts your submission in the trashcan quicker than incomplete or unexplained information. In some industries, there are only a select number of legitimate insurance carriers. Every time a submission is sent to those carriers, they form an opinion of your company, either positive or negative. That opinion alone could cost your company thousands of dollars over the years.
Finding the right broker partner is key to obtaining the best pricing without sacrificing coverage. You want a broker with access to all the available carriers. It is also important to partner with a broker that knows the complexity of your industry and the specific coverage that is needed. Ask yourself, “How is my broker selling my business to the underwriters?” and then help your agent tell your story.
Develop a Strategy
60-120 days prior to the renewal, your broker should have a pretty good pulse on what the market and the incumbent are doing. In many cases, the underwriter is willing to provide renewal indications well in advance. If the service and coverage from the incumbent underwriter are good, and the renewal indications come in below market, it might make sense to keep everything where it is.
If this is the year an account chooses to go to market, it’ll be important to decide what kind of approach to take (e.g., shotgun the market, sending to everyone or targeted marketing, sending to a few specifically qualified and selected carriers).
Submission Tips
The two most important things underwriters look for are insight into your operation and complete information. Here are the most commonly overlooked items in submissions sent to insurance carriers. If you have all or even just some of these items in your submission, you will be well on your way to getting your submission to the top of the stack.
Story
- Narrative – This is where you get to show off and share insights about your company. Tell the underwriters what makes you a good risk and why you’re better than your competition. Talk about your culture: what makes your business unique? Describe your business mix, the awards you’ve won, and the clients you are proud to have. Highlight the key people in your organization. Share the key initiatives in your business (where you’ve been, where you’re going, etc.). Also, spell out why you’re shopping and what you’re looking for from your next insurance carrier.
- Loss Summary or Loss Ratio – Summarize your last 5 years of loss history by line of coverage. Know if you are making the insurance carrier money or not, so you know where you stand in negotiating leverage. If you’re not profitable to a carrier, there’s no leverage. If you are profitable, they’ll be willing to negotiate. If there have been losses in the past, address it. Explain why they happened and what you’re doing to prevent it from happening again.
- Large Loss Explanation – Explain in detail any loss with a total incurred value over $25K. State how it happened, whether or not the involved employee is still with the company, what could have been done to prevent it, what you’ve done in response and where the claim stands now (i.e., worker on light duty, set to be fully released soon).
Complete Information
- Loss Runs – For all lines of coverage for the last five years that are currently valued (run within 90 days of the coverage effective date).
- Fleet List – In addition to the basic information, including Gross Vehicle Weights, Cost News, Garaging Location and Full VINs. Summarize the count by category, such as Tractors, Trucks, Trailers and Private Passengers.
- Driver List – Including License # and the State of Residence and, if possible, MVRs on all drivers. Understand the carrier’s driver qualification standards. Pre-check the MVRs, prepare stories for borderline drivers and take care of the drivers with poor records before submitting them to the carriers.
- Statement of Values – The schedule showing your complete list of locations, property limits, construction, building use, square footage, year built (updates if older than 20 years) and protection items installed (sprinklers, alarms, cameras, fencing, etc.).
- Loss Control / Claims Management Efforts – Describe the current programs you have in place, such as frequency of safety meetings, driver training/qualification standards, modified duty/return to work programs, accident & claim review processes, employee screening, etc.
- Timely – Get all of the above information to your agent 75 to 90 days before your renewal.
In closing, it’s typically recommended to limit the frequency of marketing to every 3-4 years and shop your insurance outside of that timeframe only for specific reasons (bad claims experience, unacceptable renewal pricing or terms, etc.). Insurance underwriters put a lot of time and effort into putting a proposal together; if they feel there isn’t a good opportunity or chance for success, they might not even quote. Save your powder for when you really need it.
Summary
Get Your Story Told
- Narrative
- Loss Summary
- Large Loss Explanation
Send Complete Info Early
- Loss Runs
- Fleet List
- Driver List
- Statement of Values
- Financials
- Loss Control / Claims Management Efforts
Tony Hopkins
Tony has also realized that talking a good game is not enough. The true mark of a professional is execution. Horton achieves this through a process which consistently delivers on promises made and holding themselves accountable. “Once a plan is established, we are committed to plan execution. Our team functions as an extension of our clients operations; we are just as invested in their success as our own – their goals are our goals,” says Tony.
Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.
