Choosing The Right Agency Is As Important As Choosing The Right Insurer

Is your business insurance plan wasteful or wanting? Either way it could end up costing your company thousands of dollars. When it's time to review your current program, be sure to avoid the two most common problems:

• Excessive insurance and overlapping coverage

• Under-insurance and coverage gaps

In today's complex commercial insurance marketplace, many employers enlist an insurance agency to help them find the insurance coverage they need. But how do you know your insurance agency is giving you the right advice?

Hopefully, you'll find an answer to that question before it's too late. It is prudent to take some time upfront to evaluate your insurance agency and its use of strategies and services for helping protect your business and your bottom line. Here are three key areas for your insurance agency to look for opportunities:

RISK ANALYSIS/COVERAGE REVIEW

The many different ways your company can suffer a loss and the multitude of insurance products available to protect you can be overwhelming. Add obtuse insurance concepts and lots of legal language, and understanding your policies becomes a job for a specialist. The experience, knowledge and diligence with which the agency undertakes this responsibility can ultimately save or cost the company money.

• In planning your insurance program, does your agency use a systematic survey/ review of operations, physical facilities and records to identify exposures? Leased equipment, for example, is commonly under-insured-has your agency asked if you have any?

• In addition to providing core coverages, does your agency identify peripheral exposures and coverages common to your industry?

• Does your agency discuss with you and pay special attention to areas where both gaps in coverage as well as redundancies commonly occur? (If your agency aggressively markets added coverages, it would not be uncommon to discover you have multiple policies covering the same thing.)

Most commercial property insurance policies include a mechanism whereby the more risk you are willing to self-insure in the form of a deductible, the lower the premium. The appropriate balance between deductible-related premium savings and out-of-pocket loss coverage is unique to each company. Rather than just pass along policies with "standard" deductible levels, skilled agents recognize both the premium savings and increased exposure that higher deductibles represent and undertake in-depth analysis to achieve the best balance.

TIME ELEMENT TRACKING

Many business insurance policies provide coverage for exposures that change over time. Without regular monitoring and adjustment, these "time element coverages" can rapidly become inadequate or excessive-exposing your company to the cost of an under-insured loss or premiums for coverage you don't need.

If your business is growing, for instance, loss of income coverage (in the wake of an insured peril) based on sales three years ago may not come close to covering the lost income you might suffer if a fire shuts down a production line next week. If your sales have contracted, you may be paying for a level of insurance you can't use. A good agent proactively initiates annual reviews of all time element coverages, working with clients' financial officers and others to assemble an up-to-date picture of time element related insurance needs.

• Has your agency identified for you all the time element coverages included in your policies along with the factors that need to be monitored to assess appropriate insurance levels?

COST-SAVING SERVICE

Once in place, commercial insurance is an ongoing, active function. There are claims to process; changes in equipment that require corresponding coverage adjustments; certificates, proofs of insurance and bonds to be issued; and questions to be answered. In fact, contact with your agency may be frequent. And if time is money, timely service is money saved.

• Does your agency guarantee your phone call will be returned no later than the end of the next business day?

• Does your agency provide a designated account team with multiple contacts that assures a person with direct familiarity with your company and coverage is always available?

• Does your agency provide offices and resources in other states where you have facilities or are bidding work?

• Are certificates of insurance and ID cards available online 24/7?

If your agency can't say "yes" to the questions posed here, you may want to re-evaluate the relationship. A sound risk management and insurance program is vital for a strong foundation for success.