Let’s be real, shopping your commercial insurance is not a fun process.
There are limitless questionnaires and applications, deciding which agency(ies) will quote your business, and then once you have invested all that time you have to figure out which quote is actually best for your company.
Shopping insurance will never be fun, but you can at least be certain you are getting the very best possible premium using the tips in this article.
A couple quick housekeeping items…….
First, if you are a smaller business that does not spend at least $100k for your insurance, please be advised that you likely won’t see nearly the results of larger businesses that are spending hundreds of thousands or even millions on their insurance policies.
Insurers are motivated by money, and the reality is you just are not spending enough that they would sweat losing (or not winning) your business enough to offer you a significant savings.
This does not mean you cannot benefit, I just like to offer a dose of reality so folks don’t go getting all excited for nothing.
Next, before we dive into this please read this disclaimer and keep it at the front of your mind. ***Premium and savings are IRRELEVANT if the coverage provided is lousy!!!***
Basically, don’t get excited about savings on premium if you could end up losing everything because of crappy coverage. Savings of $100k or even more won’t matter very much if your businesses closes its doors because of uncovered losses. Okay, now with that out of the way, let’s forge ahead.
First, if you have had any claims in the past five years you need to develop and implement a clear strategy that shows you have identified the reason(s) for the claim and done everything possible to ensure such claims will not happen in the future.
This way every underwriter that sees your account will know you are being proactive and demonstrably working to prevent future claims, and that protects the insurer’s pocketbook as much as it does your own.
Next, you need to know how the insurance marketplace works and how to use that information to your benefit. Here is a peek behind the curtain…..
Insurers offer different rates, commissions, coverage options, etc. to different agencies based upon the strength of that agency’s relationship with that particular insurer (if you’re an insurance agent and you’re reading this part thinking, “That’s malarky!”, well, I get it. I’d feel the same way you do if I were in your shoes. Please know I mean no offense, I just have seen this happen many times. You may be on the losing end of this reality because another agency has stronger relationships and/or greater capability, and if you are I feel for you but it is reality nonetheless.)
It should come as no surprise that many agencies tend to place the majority of their customers’ business with the insurers that pay them the highest commission.
While this may sound like a bad thing at first, it is actually beneficial to both you and your agent if you strategically leverage those relationships.
Those higher commissions are typically paid to agencies that place more business with that insurer, which means the agency has a stronger relationship with said insurer.
That relationship can be leveraged favorably for your business to create savings that you will not otherwise achieve. Here are the steps I always take to make that happen for my clients.
Give this list below a read, take what is useful to you and adapt it however you feel will best fit your business, and disregard whatever is not helpful.
- When you begin the marketing process, select multiple agencies to participate. I often use three of the “big dog” agencies (top 5 largest in the US), one or two others that are in the top 10, and search for smaller regional or even perhaps local agencies that may have proprietary insurance programs available for a given type of business. Be sure to also contact companies like Farm Bureau, State Farm, etc. that independent agencies cannot quote for. While these companies do not write a large volume of commercial business, they may quote for you and might have a grand slam offer. You just never know until you ask.
- Without disclosing too much information (like expiring premiums, which I almost NEVER disclose but are always requested) give those agencies a good description of your business’s operations, employee count, and roughly how much business you do in a year.
- If those agencies are interested in quoting, make them sign a document saying that they will not approach any insurer, underwriter, broker, or discuss your account with anyone either verbally or in writing without express written permission from you.
- Have those agencies list their top five choices of insurers with which to quote your account, and make them sell you on why their agency has the strongest relationship with those insurers and should therefore be awarded the privilege of representing your company with those particular insurers.
- Once all agencies have submitted that list, simply go through and identify which you feel will accomplish the best results for you. Generally speaking, the agencies with the highest amount of written premium and/or the ability demonstrate a strong personal relationship with that insurer’s decision-making leaders are good indicators of a strong relationship.
- Assign insurance companies to each agency accordingly. You may find only a couple agencies actually have the best relationships, or perhaps all of them. Either way, you should do what is best for your business. Do not involve any agency because you feel bad for them.
- When the quotes come in, do not discuss one agent’s results with another agent, EVER. It is unfair to the agents to do so.
- Allow the competition to benefit you. I cannot tell you how many times I have heard, “well, that’s the absolute best ________ insurance company can do on premium….” and the next day gotten a phone call saying, “Man, you’re the luckiest guy alive! They came down another 10%!!!”
Have you ever known anyone to be upset that they got an increase in their paycheck? Yeah, me either.
How about if someone takes a pay cut? How do they typically react to that? Have you ever seen someone thrilled that they were suddenly making less money?
Ever shopped for a car and had the dealership manager randomly come out and knock 20% off of a price you already agreed to pay for the vehicle?
Remember this when you market your insurance. If there is no incentive to offer a lower premium, rest assured none will be offered.
You may be wondering, “Why would you not disclose the expiring premiums? Isn’t that required?”
The answer is no, it is not required. If they try and tell you it is required, do not give in.
After all, a new business has no expiring premium because they have never had insurance before but they get quoted all day long. Any underwriter worth their salt can quote without expiring premium information, and in my opinion you want them to do so. Here’s why:
Typically underwriters will review a potential client’s account and have an idea of the premium they want out of that account. Imagine that number is $250k.
Now imagine that same account is currently paying $375k.
Without the knowledge of current premium, the underwriter may well offer the $250k premium.
If the underwriter knows the account is paying $350k, they could very easily offer $300k or more as that would still save the potential client a significant sum of money.
So instead of getting the quote at $250k the initially offered premium is $325k. That potential client just lost $75k and they will never even have a clue.
Again, the insurance industry is stacked in favor of the insurers and agencies, but this is one significant way you can use that system to your advantage.
If you have any questions, drop me a line in the comments or send me an email through the website and I’ll be happy to discuss this with you.
Good luck, and happy shopping!
To Your Success,