How to Control Insurance Costs
by Shel Horowitz
Insurance adjusters certainly hear some bizarre things -- like “The pedestrian had no idea which direction to go, so I ran over him.”
Michael Long and Mike Daggett of the FBC's newest sponsor, Axia Insurance Group, sprinkled a few of these howlers through their presentation at the September gathering. But primarily, they focused on strategies to lower insurance costs over the long term. "Insurance underwriters have discretionary credits -- 0-40% of the premium. Meet your underwriter, in person, when possible" Or, at the very least, "have the agent get the underwriter on the phone.
"Get your corporate biography, co. philosophy, best practices on paper. They are looking at a pile of paper, they have no idea who you are, what makes your company special.
The first thing to do, according to Long, is to get to know the people you're dealing with: not just your agent, but even the underwriter.
While it may not be intuitive, sharing the risk is often a good strategy. Said Daggett, "If you have a small claim, pay it and submit as 'for information purposes only.' You will increase your desirability to a carrier and over time, you will save money. If you self-pay claims under $500, you show fewer claims, and are a more attractive insured." At the same time, by reporting the payout, you protect yourself if the incident turns into a larger claim.
Agents and underwriters have a lot of discretion in setting premiums. The better they know you, the more likely they will find you a better rate.
Also, take an active role in examining the details. Regarding workers' compensation, for instance, Daggett reminds clients, "The base rates are set by the state, but there are other ways to manage the costs. There are 523 different classifications in the state of Massachusetts," each for different types of employee classifications, and each with its own set of guidelines and rates; that number shifts up or down one or two every year. "If you’re incorrectly classified, you could be paying double for your workers comp."
If you handle your own payroll, make sure to take all the deductions and delete overtime before reporting.
And most of all, examine your Loss Runs often enough to catch mistakes early -- Daggett suggests at least four times a year. "You want to see what that carrier is charging back on your account. You can see exactly what’s been reported, and correct any mistakes. Two contractors had similar names, and claims showed up for the wrong one. One year, there were 20 major claims that showed up on the wrong account. I got a call from the underwriter, 'we’re going to cancel them, they’re horrible.' Every one of them belonged to the other" company.
One more howler from the Axia collection:
“The guy was all over the road; I had to swerve a number of times before I hit him.”