Negotiating your business insurance renewals are just that, a negotiation. It’s not a “take it or leave it” scenario. It doesn’t hurt to ask, and the fact that you’ve inquired demonstrates your commitment to safety and risk management.
“Too often, a commercial insurance renewal follows a pattern — the agent or broker comes in 30 days beforehand, he or she finds out if there have been any major changes and then lets you know how much your policy premium has gone up,” says Chas Lowe, commercial insurance specialist at Zito Insurance Agency Inc.
However, whether it’s a mom-and-pop shop or large corporation, there’s usually room to negotiate price, coverage or value-added services such as risk management or other compliance-related tools.
Smart Business spoke with Lowe about the dos and don’ts of your insurance renewal.
How does your business get leverage to negotiate the renewal?
There needs to be a link between the overall risk management strategy and the insurance buying process. Your company needs to think long term; insurance shouldn’t be an afterthought.
With the help of your agent or broker, your organization needs to demonstrate its commitment to safety and good claims history. Documentation that proves safety is part of the fabric of the culture might include a copy of an employee handbook, driving and accident investigation policies, minutes from safety meetings or any other safety initiative your company has undertaken.
If you are a better risk than you were a year prior, you can help drive the conversation to not only reduce rates but also negotiate a better coverage structure.
Besides a lower price, what else can be negotiated?
While a small business doesn’t have the same negotiating power as a company that pays a six-figure premium, there are a number of things that you can request, such as:
- A more advantageous or efficient coverage structure. This might mean negotiating all of the buildings and equipment be covered on a blanket basis. Or, because metal prices fluctuate so much, a scrap-metal dealer’s insurance rate can be amended to be based on the tonnage of material it handles, rather than its sales.
- Multi-year rate guarantees. These are helpful from a budgeting standpoint.
- Loss control help from the carrier. Examples include identifying hazards in the workplace, recommending better controls, providing training materials for the employees and establishing best practices for a safer work environment.
- Access to risk management tools. Telematics can be put in commercial vehicles to track how drivers accelerate or brake. Mock Occupational Safety Health Administration (OSHA) inspections help ensure the business is OSHA complaint. Or, infrared scans noninvasively examine equipment to discover electrical problems or motors that are running hot, in order to prevent future problems.
In today’s environment where new exposures develop quickly, insurance carriers have become more proactive in developing resources and tools. Asking for more from your broker/agent and carrier can go a long way in showing that you see your insurance as more of a relationship than a commodity.
Is shopping your insurance every year the best way to ensure you get the lowest price?
It may feel counterintuitive, but the more you shop your insurance, the more you guarantee an insurance carrier won’t come to the table with its best offer. These submissions typically make their way to the same underwriters year after year. If they continually see your business being shopped, they won’t be as aggressive on the pricing side.
The industries you serve, the materials you use, your annual sales, which states you operate in, etc., all factor into whether an insurance carrier will offer you an aggressive quote or not. It’s very much a case-by-case basis.
There really is no rule of thumb as to how often you should shop your insurance; however, if you feel your carrier is being unfair or if the company has undergone significant change, like a merger, you should talk to your broker about taking the business to market.
This demonstrates that you are loyal and have developed a capacity to build relationships, which is exactly the kind of organization a carrier likes as a customer.
Insights Business Insurance is brought to you by Zito Insurance Agency Inc.