The property and casualty insurance market is like the tide; it changes on a regular basis. Two years ago, the insurance market was soft – a buyer’s market. For the past year or so, it’s been firming, or a seller’s market.
Competition is a good thing; we deal with it every day, and strive to differentiate ourselves from others. Buying property and casualty insurance is no different. Competition for your insurance premium dollars puts you in the driver’s seat. But wait – differences between insurance companies, coverages and services do exist. If you are considering accepting competitive bids, follow these helpful hints.
Use Bid Specifications
Although they take time to develop, bid specs save you time and frustration in the long run. Specs provide the same underwriting information to all parties, layout the minimum coverage requirements, and describe any services required throughout the year.
Absent the specifications, agents and underwriters will offer what they like, thereby making it difficult, if not impossible, for you to compare proposals. In other words, without specs, you could end up with an apple from one agency, an orange from another and a pear from a third!
No less than four months before your insurance renews, develop specs which include:
- Underwriting information, such as number of students and FTEs, property values, a driver list with driver license numbers, currently valued loss information, etc.;
- Minimum coverage requirements and limits (property amounts, liability limits, etc.); and
- Service requirements.
This effort is not the same as providing bidding agents a copy of your current insurance policies with the premiums deleted. Avoid the headaches and hassles of attempting to understand the coverage differences by requiring agents to meet pre-determined coverage bid specifications. Put the responsibility of advising what carriers will and won’t offer in the agents’ laps.
Ask for References
Choosing an insurance company is like hiring an employee; all other things being equal, you want someone with experience in your industry.
Now, About those Services
If you receive an attractive coverage and premium proposal, consider the services you might gain or lose by changing agents and/or insurance companies. For example:
- Make a list of the services your agent provides. What does he/she do, when, how often, and does he/she take the initiative or only respond to your requests?
- What risk control services or programs does your present insurance company provide: e., slip and fall prevention, early return to work, and/or safe driving habits? Have they been helpful?
- Have the number and amount of your claims decreased following the introduction of safety programs?
You may receive a proposal whose price is 20 to 30 percent less or more than your current premium. This does not necessarily mean you’ve been paying too much (or too little). It is typical for industry new-comers to offer lower prices. So, don’t presume a markedly lower price this year will mean the same for next year. Express any “what about next year?” premium concerns you might have to the agent and underwriter. What kind of response do they offer? Is it reasonable?
Reviewing property and casualty insurance proposals can be a mind-numbing experience, and the inclination to accept a proposal based on an attractive price (read: lower premium) is understandable. However, before switching:
- Make sure the coverages are equal to, or better than, what you currently have;
- Consider the carrier’s experience with your industry; and
- Analyze the services available from the agent and the insurance company, and assign a monetary value to them.
Using a bid specification document will go a long way toward helping you make an informed decision. If you need help developing a bid specification document, call Joy Gänder at Gänder Consulting Group, 608-286-0286, or email your questions to her at firstname.lastname@example.org.
By Joy M. Gänder, CPCU, ARM
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Phone: (608) 286-0286 │Fax: (608) 442-6811