Do You Want Lower Insurance Rates?

April 1, 2012 - PRLog -- As the United States comes out of what is being called the “Great Recession”, one important dangerous factor will be negatively impacting businesses in the coming years:
            Insurance rates will begin to rise at a more rapid pace.

The reason for this phenomenon can be attributed to several reasons:
1.   The Investment income of insurance companies has been low for many years and has not kept pace with industry losses.
2.   2011 will go down in history as the costliest year for claims being paid for natural disasters totaling over $340 Billion.
Since insurance companies have not made the investment income to offset their claim reserves, the resulting directive by industry leaders is to increase consumer’s insurance rates.

How can a business better position itself from these anticipated premium rates increases and remain profitable?  The answer lies in a company’s ability to be viewed as “Best in Class” by insurance company underwriters.  Carrier underwriters are the people responsible for the pricing of a company’s insurance program.  The more comfortable they are with what they see from a broker’s submission and narrative summary, the better pricing concessions that business will receive.  

Businesses that are seen as “Best in Class” qualify for larger discounts, and consequently receive lower insurance premiums than their peers.  In order for a company to qualify as “Best in Class”, they will typically have lower loss ratio’s and will have policies and procedures in place designed to lower their losses, business risk and operational costs.

One key to profitability and lower insurance rates is knowing your RiskScore™.  In the financial world, homeowners understand that mortgage underwriters look at your “credit score” when providing mortgage rates.  What happens when an applicant has a “good-high” credit score?  They will typically receive lower mortgage rates.

The same holds true in the insurance world.  A “good-high” RiskScore™ will usually translate into a business qualifying for lower insurance rates and subsequent lower insurance premiums. In order to maximize the credits/discounts a company can quality for, it is recommended to complete a Risk Assessment which would include determining your RiskScore™.  Your RiskScore™ can also become a benchmark from which to create a roadmap for changes that a company desires to make in order to be more attractive to the underwriting community.

One particular area that businesses will see increases will be with Workers’ Compensation coverage.  As medical costs continue to rise, which are a major factor of Workers’ Compensation pricing, it is critical that businesses insulate themselves with sound operational procedures.  Some states, like Florida, have already seen back to back rate increases starting in 2011 and 2012, and anticipate continued increases next year due to deteriorating industry results.

It is also important that companies work closely with their agent or broker to improve their “Risk Profile” which when supplemented with your RiskScore™, positions a company in the best possible light in order to qualify for preferred pricing.  It may take time to deploy the policies and procedures in order to be considered “Best in Class”, but the payoff will be worth the effort.

For more information, call Rick Dalrymple at 407-998-4108 or email at Rick.Dalrymple@ioausa.com       www.RichardDalrymple.com

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Risk Manager, Consultant, Author, Speaker. We help companies increase their profitability by reducing their business risk. We provide tools that help companies compete better in their marketplace by improving their operational efficiency.