Every year you go through your insurance renewal with your agent or broker, and possibly some third party candidates vying for your business; but are you asking to review what they are sending out on your behalf, or do you simply assume they are giving an accurate portrayal/recap of your conversation, information shared and company overview? Going through the insurance renewal process is as much fun as flossing your teeth with a chainsaw, but given the cost of insurance (typically your second largest expense behind payroll) you should be paying attention to this process. It is arduous, and typically consists of meeting with your incumbent agent and potentially other suitors to complete supplemental forms and provide other necessary documents, such as financials, updated loss runs, copies of licenses, etc. However, this information and how it is compiled and submitted to underwriters is a critical part of the process and one where you need to make sure you are represented accurately.
An Accurate Portrayal
When an agent or broker meets with you, they should be asking lots of questions about your operation, safety practices, equipment and fleet maintenance, etc. They then take that information back to their office and complete what are known as Acord forms. These are the standard industry documents they submit to underwriters to solicit favorable terms and premiums for your consideration. When you secure your coverage, you are signing these forms, so whether you know it or not, you are seeing some, if not all of the information, they are sending out about you.
Underwriters review this information, as well as company Web sites and other Internet sources to garner as much information about your company as possible, but mostly they rely on the information that the agent has complied in their Acord submission and narrative (if one has been done) to “grade” you as a potential policy holder of theirs.
It never ceases to amaze me that companies don’t ask to see this information. After all, this is the information being sent out to the marketplace to portray you. It only takes one knucklehead agent trying to get the upper hand on the competition to say or submit something that is borderline accurate, or in some cases completely false. Information such as this can put you at jeopardy when the carrier comes out to do their inspection or if a claim arises.
This is where becoming, “Best in Class” comes to play. Regardless of our field, we all like to think we, and/ or our companies are the shining pillars of light in the industry and the rest of the industry is trying to catch us. However, if you were asked to show you were better than your competitors in the industry, could you?
There is an emerging trend of information, systems and technology designed to do just this, but due to financial costs associated with these new technologies few companies are actually taking advantage of them. Everything from GPS units that can record and play back several minutes prior to an accident, to roll over warning systems and advanced safety training. While these are valuable tools in the effort to become “Best in Class”, they are really nothing more than tools. Becoming “Best in Class” is going to take more commitment from ownership than simply investing in technology and showing up to the office on a daily basis.
What every company President, CFO, Controller, Risk Manager and anyone involved in the day to day operations and procurement of insurance needs to be aware of is this: underwriters receive hundreds of submissions each month, and each underwriter is looking for accounts that offer the highest probable rate of return. If your annual premium is $100,000 and you have had losses in excess of $60,000 three of the past four years, you are not being viewed as best in class by the underwriters. In fact, you are hovering in the below average to poor range even if you are the largest hauler in your area with the best looking fleet.
There are hundreds if not thousands of other submissions on their desk each year that look just like yours, or that are even better in terms of loss ratio. So how can you gain a competitive advantage? What makes the submission they are reviewing on your company stand out from the others on their desk?