How Smart Contractors Reduce Their Insurance Costs
Posted by Robert Phelan on Tue, Jan 26, 2010 @ 07:37 AM
For way too long the perception of commercial insurance buyers has been that insurance agents get paid to quote cheap insurance. In some cases this is carried to an extreme where the agent who is perceived "best" is the one who sells the cheapest insurance.
In actuality, insurance agents only want to provide cheap insurance when it's in their best interests - either acquiring your business for the first time or when they are threatened by even cheaper insurance from competitors. As businesspeople, what they really hope for most of the time is expensive insurance because that's when they make more commission. What is wrong with a system where the buyer wants a completely different outcome than the seller? Everything!
Here is what we propose as an alternative - Performance-Based Risk ManagementTM. Most service professionals of every stripe are paid to produce an outcome. In order to get paid they have to produce a result expected by the client i.e. tax return is filed on time with the most deductions taken, lawsuit is won with the least amount of hassle, new software is installed and productivity goes up 25%, etc.
As a contractor, cheap insurance should not be the result you are looking for. Your insurance costs are determined by two primary factors:
1) overall market conditions
2) your Risk Profile (with a heavy emphasis on loss experience and safety culture).
Most insurance agents pretend to look like heroes as they ride the soft market down the curve, bringing ever cheaper insurance to you each year until the market turns and then as soon as premium pricing starts to increase, they shift all of the blame onto the insurance carriers . They shouldn't be a hero or a villain because they have absolutely no control over the market.
Risk Advisors can help construction companies improve their Risk Profile and this is 
what they should get paid to do. Regardless of market conditions, if your Risk Profile is maximized (underwriters are falling over themselves to get your business), you win. This is the result or outcome you want. If you pay your Risk Advisor a fee to help you get this result, then your incentives are identical and you both win.
Why doesn't your insurance agent propose this? Because they don't have the tools to help you.
Call a Risk Advisor today. They have all the tools to improve your Risk Profile. Sign a performance agreement with them and watch your insurance costs plummet.