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Reaping big benefits from consolidated insurance buying
August 15, 2018
General Liability. Property. Equipment Breakdown. Workers’ Comp. D&O. Commercial Auto. Cargo. Environmental.
Businesses, on average, purchase a dozen or more insurance coverages to address their day-to-day risk exposures effectively. As new risks emerged – like those posed by new technologies or global expansion – so has the need for other specialized insurance coverages, adding more to a business’ coverage tally.
Consequently, diverse insurance buying needs have required businesses to buy coverage from multiple insurance carriers for many reasons, even beyond price. Tapping into a carrier’s expertise in a given specialty line. Meeting significant capacity needs with tiered programs. Plus, as conventional wisdom goes – it’s never wise to put all your eggs into one basket.
The world reminds us every day that things change quickly – including a business’ risk management needs and insurance buying requirements. Given the ever-increasing pace of change and the growing complexity of business risks, there is a stronger argument for businesses to consider how they can make the most of their broker and carrier relationships and consolidate their insurance programs.
Greater efficiency is one of them. Insurers and brokers alike are merging to gain cost efficiencies, acquire new capabilities and achieve scale. These merged entities are more diverse in their offering and more global in their scope, as well as better capitalized. This scenario offers risk managers plenty of choices too.
Risk managers are also looking for ways to streamline their processes and achieve greater efficiencies while reaping the most value from their insurance buys; all while juggling the new and unknown risks with the old known ones. Managing coverage scattered across multiple carriers doesn’t make it easy. As a result of this industry consolidation, carriers’ broader product portfolios are making it easier for risk managers to consolidate buying among a smaller number of insurers.
A Customized Experience
Given technology innovation and the power of algorithms, retailers know more about our buying habits than we do and so can customize our future shopping experiences. Knowing what we like and what we don’t like allows them to tailor what product information they send our way. Customized information cuts out some clutter, boosting efficiency. In fact, as individuals, and as businesses, we are demanding more of it.
We’re increasingly looking for more customized buying experiences and products. Not all businesses operate the same. Therefore, how can their insurance? Developing strong working relationships with brokers and carriers allows deep-seated understanding of a business’ operations to grow and that’s where customization can really happen.
Knowledge = Power
Customization requires a deep understanding of the ins-and-outs of the business, of the risk exposures it faces or the problems that it’s trying to solve. In the commercial insurance industry, especially in managing the large, global, complex risks that our clients face, there are few algorithms to help pinpoint needs and buying habits. Instead, it’s a strong working relationship where we get together and get to know each other to generate strong, powerful solutions.
Gaining a complete picture of organization requires multiple perspectives. We benefit from allowing others in to take a look and gather different perspectives. As a carrier, gaining a deep understanding of our clients’ operations, markets, business goals, etc., allows us to connect the dots and get a bigger, clearer picture of potential exposures that we can help manage.
Plus, many businesses aren't fully aware of their potential insurance needs, especially as the demands that businesses face are changing rapidly. Given the decades that carriers have spent working with others in varied industries, clients benefit from these added insights if past lessons learned are applied to help their risk management efforts. Working closely with carriers means that the full scope of the insurance coverages is tailored and customized just for them and their particular challenges.
More Skin in the Game
Carriers have also boosted their risk engineering/loss prevention capabilities to gain better control over the risks they, as insurers, assume , as well as, help clients address their exposures head-on. When tasked with covering more of clients’ risks, carriers can get a better, bigger picture of a company’s exposures and develop appropriate risk mitigation strategies, along with optimal insurance coverage.
Let’s face it; risks do not operate in silos. Take cyber risk. The risk itself is hard to define and understand because it’s constantly changing. Questions are rampant in the market as to what coverage is offered in a property policy for a cyber incident. Or what may be offered in the GL policy. As policies differ from carrier to carrier, and even from region to region, it can be challenging to assure seamless coverage from multiple sources.
That’s one of the biggest benefits of buying multiple coverages from one carrier. It helps solidify the opportunity for carriers to provide their client's more personalized service, including services to mitigate risk and more cohesive and coordinated personalized coverage.
It comes down to having more skin in the game – a client is financing more of their risk management investment with one market. Therefore, a carrier invests more of its resources and attention to a client’s needs and experience. A bigger investment in any business partner lends itself to a working relationship aimed at mutual success.
As business risks multiply and quickly change, the collaboration will provide us all with the clout to address them quickly.
Commercial business insurance is much more than a piece of paper, a contract. Or it can be. Savvy buyers are seeking comprehensive risk management solutions and view insurance as a service that can lower their overall costs, preserve reputation, and so much more.
Because more businesses are looking for tailored risk management services beyond just transferring risk, carriers like us are providing risk advisory services and varied, value-added services such as site audits, equipment inspections and more. For instance, through an arrangement with global risk consultancy S-RM and others, we can provide our clients services that range from active shooter training to cyber assessments to check on network availability, in addition to their insurance coverage.
These added services not only help clients manage their risks but also serve carriers well, giving us the insight we need to underwrite that risk, mitigate exposure and potentially develop new solutions for protection.
Some Final Thoughts
For an insurer, achieving a deep understanding of our clients helps us achieve more for them. For our clients, managing fewer carrier relationships can undoubtedly not just boost efficiency but also improve risk management effectiveness in a variety of ways – from managing claims to easing the renewal process to lessening the potential for coverage disputes.In a complex world, we are all looking to find better ways to balance the knowns and give us more room, or at least time, to keep an eye out for the unknowns ahead of us. We all stand to reap big benefits by working more frequently and closely together.