Insurance Renewals: Tips on Coverage and Costs

Health, property and liability options

With 2015 in sight, insurance policy renewals are happening now. December and January are the busiest times for health insurance renewals, along with property and liability coverage.

Many business owners rely on their incumbent insurance brokers to handle renewals every year. But is it time to reassess this process? Are there ways to minimize costs?

Health insurance

Brokers help company leaders evaluate and recommend health insurance providers and plans for employees. In today’s changing environment, a different set of tools, services and product choices are available to company leaders from their insurance broker. If there are modifications in employee benefit providers, or even benefit plans, your broker must provide you with financial information on the impact of the changes to employees to help you make sound business decisions on their behalf.

Engage your trusted third-party advisor to examine all the possible marketplace insurance options. This will allow you to compare private market plans and maximize services to favorably impact your bottom line. Sometimes the plan options and services you need may not be available from your broker. Navigating healthcare alone with your broker may have worked in the past, but today it pays to have an independent, unbiased healthcare expert advocating for your interests at your side.

Property and liability insurance

In the property and liability insurance arena, your broker may ask you for permission to simply obtain a renewal from the incumbent insurance company, since a large marketing effort took place during the past year or so. You may agree to this, and then face rate increases at renewal time — increases which may be unjustified, especially if there are no claims. The broker receives the same compensation whether they market your account or if they simply renew a policy (or policies) with the incumbent insurance provider.

Unless a broker is engaging competitive tensions among insurance companies, it’s more difficult to prevent rate increases. Competition typically does not exist between brokers because most clients only have one insurance broker in the marketplace working on their behalf and an incumbent broker “reserves” all the insurers contracted with their agency. This ability to reserve or block competition from other brokers may limit the insurance choices available for consideration. Finally, some brokers are paid on commission by an insurance company, which could sway the broker’s decision to select the insurance company that may be best for you. ERA recommends negotiating a broker service level agreement with your broker.

Your broker may also suggest that in spite of previous rate decreases, the current insurance rates are not sustainable due to an increasing number of claims. How has your broker helped you reduce claims? Did they complete a claim review with the adjuster to help ensure that claims are being handled without delay to expedite closing? Accounts with dozens of claims need claim reviews completed on a quarterly basis. Your broker’s compensation should include various services to help you maintain and control exposure information, and reduce and minimize claims.

Today’s soft insurance market is characterized by declining rates. This is the time to reevaluate insurance offerings and companies. Make certain you are receiving the most competitive coverage at market rates.

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