Insurance Assurance Newsletter
Issue #120 - August 2010
The Simmonds' Business Insurance Index™ For August, 2010
Renewal Premiums: -5% to Flat
Renewal Coverages: Liberal Terms
Buyer's Outlook: Long-Term: Prices Flat
The best way to describe the current insurance marketplace is confused.
Underwriters want more premium. However, competition is preventing them from inching premiums up. At the same time, uninformed buyers are in a mode where they almost expect premiums to go up based on the overall sour economy.
That attitude allows insurers to bump premiums by 5% with very little push-back. However, if there was pressure on the underwriter, the premium increase would go away.
Uninformed buyers are allowing their premiums to increase.
I continue my advice from prior months: If you have not bid your insurance in a few years, get out there. You will pay too much for your insurance this renewal without some competition - even if it is just rattling your agent's cage a bit.
Start the renewal process early - 120 days minimum. If you are not bidding, tell your agent that you expect your renewal rates to drop by 5% and that you want confirmation of this by 90 days before renewal. Without that assurance, go to bid.
Redundancy & Treaties
Here is my philosophy of risk management: A loss prevented is better than a loss that is insured. A limited loss is better than a catastrophe.
I buy a new computer every three years. That lessens my chances of a computer failure. I backup my data using an online service where my records are stored in the mid-west. That lessens my chances of a catastrophe destroying my computer and my backup. Further, I have an external hard-drive that backs up my computer. If my computer fails and my backup fails, I have a fall-back position. My data protection plan has redundancy. I am so dependent on my computer data that I am considering another backup hard-drive that I take to my parents' house.
No, I do not think I am being paranoid.
How can you build redundancy into your systems?
Even the smaller parts of your operation should include redundancy.
Suppose you are ready to buy a new copy machine. You are looking at the latest, greatest, and biggest copy machine. Perhaps it is better to buy two smaller machines - providing redundancy in case one machine breaks down?
Your office is critical to your operation. Can you set up a "treaty" with a company in a nearby town such that they can use your office if a catastrophe strikes, and you can use their office if your operation is afflicted? Each of you build your computer system so you can easily accommodate the other. Maybe you even place a duplicate server at the backup location.
Do you have a friendly competitor willing to strike a similar bargain over the use of machinery and equipment? Their place burns, they can use your shop. Your place burns, and you use their equipment.
Perhaps it's too expensive to have a generator at all of your locations. Is there a portable generator that can take care of key components? That generator is sent to the location that has lost power. It may take an hour or two - better than a lost day, though.
This all takes specific thought (and perhaps a bit of paranoia). Designate one person to look at every key aspect of your business with an eye to removing individual components of the process. How can you build redundancy into that component? How long will actual replacement take? How much will duplicates cost? What is the weakness and how is that weakness reinforced?
How I Help My Clients
I fix broken insurance. Uncertain coverage and painful premiums. Consulting on, but never selling, insurance.
How can I help you?
--Are you unsure of the coverage you have?
--Are you unsure about your premiums?
--Are your policies coming up for renewal and you want to investigate the marketplace?
--Are you unsure of the abilities and work of your insurance agent?
I can help. Call or email me now.
Insurance Agents
I occasionally work with insurance agents in the review of commercial accounts. You provide me with a copy of the current policies. We talk on the phone about the exposures and issues presented by the insured. I then compile a list of coverage and risk management considerations. We discuss that list in a phone conversation. You then have 3 weeks of unlimited email followup with me on the issues raised to further the value you receive from our work together.
You get:
-A second opinion of the work you have done.
-An unbiased extra set of eyes making coverage suggestions.
-The opinion of a long-time insurance expert with a broad range of experience.
Call or email me to discuss what you need and what you want.
Your comments and suggestions are always welcome.
Scott Simmonds, CPCU, ARM, CMC
Consulting On, But Never Selling, Insurance
Scott@ScottSimmonds.com
207-284-0085
Please Feel Free To Forward This Note To Your Business Associates
Copyright 2010, Insurance Consultants of Maine, Inc. All Rights Reserved.
We encourage sharing this newsletter with full attribution (including my web address) are included.
Do-It-Yourself Insurance Review
Concerned that you might not have the right insurance? Don't want to bring in other agents?
We respect your privacy and will never spam you or redistribute your email address.