It usually begins about 120 days before your business insurance expires. You start getting calls from brokers who want to offer a quote or proposal on your business insurance.
It they can visit, gather some information, look at your policies, they will return just before your expiration with an alternative to your present program. Hopefully at a significantly lower cost.
Generally, people are pretty pleased with the service provided by their current broker and don’t really want to make a change. At the same time, most people have had some experience where another broker did find something much less expensive. If nothing else, you want to get other quotes to keep your current insurance company “honest.”
For many companies, insurance shopping is an annual ritual which has served them well for many years. In the past, it helped find alternatives from the dozens of insurance company options and prices which tended to have a wide range. This is changing and will change much more in the future. Just shopping insurance is no longer going to produce the results it once did.
Simply put, the prices insurance companies charge are likely to vary less in the future. In the past, multiple quotes often produced a wide range of prices. In the future, it is more likely several quotes will do little to lower the cost of your coverage. This is due to three emerging trends in insurance:
Insurance companies are investing tens of millions of dollars into sophisticated systems to collect and utilize data. This has already increased the ability of insurers to predict and price losses. As more carriers get better at pricing and risk selection, there will be fewer and fewer outliers offering premiums lower than the marketplace.
There are many well-funded investors making an effort to disrupt the process of shopping business insurance. These companies are generally focused on an easier way to shop the marketplace and get quotes. Technology is making it easier to get quotes and making everyone more aware of prices from each insurer. Companies out of the marketplace are aware of it much more quickly and can adjust.
Over many years, financial markets have caused insurers to become much more disciplined about profitability. Twenty years ago, insurance companies were much more likely to reduce pricing to keep market share. Now, better information and accountability will force pricing up if results deteriorate and reduce the range of quotes.
In the future, if you really want to reduce insurance costs, you will have to reduce the risk you present. Bad risks will pay more and good risks will pay less. High risk firms who depend on competition to keep costs down will find fewer and fewer carriers willing to buy their claims. Good risks will find more sophisticated insurers eager to reflect superior claim experience in lower premiums.
Have you considered how you look to the insurance industry? Is your company seen as better or worse than your competitors? Are you taking steps to reduce loss costs and create a safer workplace? In the future, this will have far more impact on costs than today.
Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.