by Gary Glader – Practice Area Leader, Safety Consulting, CCIG
Your insurance broker has the important job of favorably positioning your business to potential insurers to get you the optimal price. While a broker’s relationships with multiple insurers can help with pricing and program options, ultimately the cost of insurance is driven by a company’s insurable losses and the structure of their insurance program.
One of the best ways to control the cost of insurance is to prevent a claim from ever happening.
Qualified brokers employ safety professionals to help businesses identify potential hazards and develop and implement policies designed to prevent losses, including workers’ compensation claims, automobile accidents, and general liability claims. This safety resource is so valuable because many small- and medium-sized businesses don’t have access to a qualified, full-time safety professional. Safety consulting services can also protect businesses from the cost of uninsurable risks, like OSHA inspections and penalties. Even clients with qualified safety professionals can benefit from safety consulting services available through their broker.
When losses occur, mitigating the extent and cost of a loss is crucial. Losses don’t just affect the cost of insurance; losses also increase the indirect and uninsured costs, including increases in the workers’ compensation experience modification rating, which can make it difficult for construction companies to bid new work.
Managing claims with the future in mind.
Insurance brokers like CCIG employ claims advocates who help clients navigate the claims process. This can include challenging insurance carrier claims handlers regarding reserves and exactly how the claim is being handled. Timing is critical here, as changes to reserves must be made before the company’s next experience modification rating is promulgated. A broker’s claims advocate can have a significant impact on the total cost of a claim, which can help prevent increases in the cost of insurance.
Optimize your insurance program’s financial structure.
Another effective way of controlling the cost of insurance involves the way the financial structure of the insurance program. Specifically, electing the optimal deductible size on your workers’ compensation policy can saves tens of thousands of dollars every policy year.
Using special analytical tools and skills, your broker should advise you on the deductible that will yield the greatest return. CCIG uses proprietary software to help clients determine the appropriate deductible, in addition to determining if participation in a dividend program will produce even greater savings. Your broker should also be able to project future workers’ compensation experience modification ratings, which is key in anticipating cost increases or reductions. It is especially critical for those in the construction industry whose ability to bid work is impacted by the workers’ compensation modification rating.
In addition to the tremendous impact these services have on reducing the cost insurance and total cost of risk, brokers must be able to articulate a company’s risk management program to insurance carriers to obtain the most favorable pricing from underwriters. “Shopping” your insurance involves so much more than sending your loss runs to multiple insurance companies and choosing the lowest price.
If you have questions about cost management strategies or your total cost of risk, please reach out to firstname.lastname@example.org. Our team is here to help you maximize your investment in your insurance programs.