1. Workers’ Compensation must be reviewed and marketed.  Do not wait until your renewal proposal is presented, do it 60-90 days in advance.   The carriers that did have the best rates have shifted and you may anticipate another shift in October.  Did you know that there are over 20+ different workers’ compensation carriers?  How many quotes have you seen?  Did you know that some agencies have exclusive programs with special filed rates?  Did you know that as consultants we have all the filed rates of every carrier and how many credits are available for each – does your agent share that with you?  Did you know that even if you are with a SIG or Captive you can still lower your rates?
2. Health insurance, shopping it does not get the results.  Health insurance is a different animal and you MUST do it strategically it is not about having four agents quoting on your account.  It is about power and clout and how to get it, they’re tools that once you know them you can always manage this process with great results.  What you shouldn’t do is take a rate increase – chances are it is not necessary.    It is also time to start getting your employees educated in managing their own health.  If you want lower costs and employees want less burden it starts with us all individually.   We have a country plagued with obesity, diabetes and cancer.  The US ranks us in the top 10 countries dying of cancer and over 60% can be prevented by lifestyle.  Take a tour of  http://www.who.int/en/ for some enlightening information about how we compare to other countries.  We do not smoke as much as other countries but we are dying of cancer – so what is the cause?  This is NOT a quick fix, but it has to start somewhere and since business are going to effected by low performing human capital due to illness, doctors visits and insurance cost we might as well start the movement.
3. Move it to improve it.  If you have a renewal date in December or January, move it, move it NOW.  This is the worst time to be renewing your insurance.   Year end, new insurance rate filings, holidays, vacation, family and 60% of everyone else has a renewal this time of year – if you are not the most AWESOME account, meaning no losses and paying tons of money for insurance you are not getting the most attention from the insurance carriers.  It’s easy to change the renewal date, just ask or demand it – DONE!  Pick the date that works for you and your business.
4. Employment Practice Insurance – Sorry but I think you may need it.  In the last five years I am seeing claims in this area all the time.  The most important source of exposure for California employers is the seemingly ubiquitous class action lawsuits for Labor Code violations.  Once they have been sued, however, employers are sorely disappointed when their carrier contends that the policy contains a blanket exclusion for all wage and hour claims.  The standard verbiage excludes coverage for any alleged violation of the federal “Fair Labor Standards Act . . . or any similar provision of federal, state or local statutory law or common law.”  Defense to retain an attorney may cost you a retainer of $50,000 whether you are in violation or not.  I see claims filed on this more often then the umbrella policy, which about 80% of all the business’ we evaluate have coverage for, so why not this?  This coverage is more readily used in tough economic times as employees find anyway to pay bills or have an employer pay for a wrongful act, whether true or not.  The attorneys are standing by to help them and you need to be protected.  Do not automatically assume you are covered for anything on these policies they are all different manuscript policies – so compare them all by coverage, price and deductible.  As always, weigh the cost and what you feel your risk is for this coverage.
5. Cyber Liability -”But…I only produce $30,000 of revenue on this part of my business”.  It would seem that it is quite a large subject and the more I read the more I learn you are exposed and it is the new hot crime.  Hackers hacking sites and obtaining confidential data.  My recommendation is to look into the coverage, weigh the cost and decide if you feel it is worth buying and review it every year as an option while comparing the actual claims statistics.  I found this PowerPoint produced by Deloitte that I found at least worth the read. Cyber Crime Report – Deloitte

Have a successful 2012!!

A proposed rate increase on workers compensation was denied by the commissioner, but it did not stop many of the carriers from increasing rates anyways. Are you shocked? Some of the most competitive carriers such as CompWest raised rates significantly, even others that said they were not taking a rate increase did, but other carriers have moved into the market and are playing aggressively.

Got Rate Increase?

However, some business that are seeing their experience modifications going up got denied quotes by many of the insurance carriers this January and fewer quotes mean fewer options. This is often the case in January as businesses can often see the worst rates and fewer options because January is the busiest time of the year for business insurance renewals, roughly 70% of all policies renew in January.

Unlike CPA’s and accountants, they would never take a vacation in April, almost all of the insurance companies allow employees to take holidays, and they have holiday parties where they shut down the office or have a skeleton crew during this time. If your account is not in good order with a low experience modification, few losses and larger premiums you are not the cream of the crop client for many of these busy insurance carriers and you get shifted to the bottom of the pile.

January renewals have always been a problem but there is an easy solution that many businesses are unaware of, change your renewal date! You can choose any renewal date you want. There are some consideration to take into account:

• Is your cash flow good during your alternative renewal date?

• Down payments for insurance can be 10%-25% to initiate coverage.

• Workers compensation experience modification should be positive, meaning below 1.00. Otherwise it will follow you for an extra few months until it catches up with your change of renewal.

• Is that a time of year that you and your staff can dedicate time to reviewing renewal information and quotes?  Think about the preceding 2-3 months as this is when the data is gathered and then presented within 1-3 weeks prior to the renewal date.

• Stay away from the 1st of the month on any quarter if you can – these are other busy times in the insurance industry, and usually for your business as well.

Other News -

Some businesses received a recalculation of their California experience modifier and for some it increased.   The bureau states that most businesses received a lower experience modifier – what is yours now? Also, you can now get your California modification worksheet online for Free from the bureau – anyone quoting your insurance will want or need this to offer compelling quotes
On your behalf.    WCIRB Report

If your experience modification is going up or is over 1.10 you need to get this fixed as soon as possible, when rates go up if you are a business that is experiencing many claims and a higher experience modification you will be the least desirable for the best rates if the market gets harder, you have to be aware of this now and see if there are actions you can take to correct the problem. I am reviewing an agency now that’s claim to fame is lowering the experience modification of businesses and we will see if they can make a difference with these two clients that can really use the help. We will keep you posted.

Are you over-paying for business insurance?  Try our Free Calculator

Insurance Consulting

Health Insurance Rates – are going up between 10%-30% for many group plans, cost for some are about $500 per employee per month.   Insanity!!

The good news: Creativity pays, HSA and high deductible group plans and self funding can carve out some deals but only if you have over 50 employees, self funding is more in the over 100 employee arena. Also, what you can’t change on this front you can on the package and workers’ compensation savings so it can at least off set this cost.

Workers’ Compensation – a rate increase was approved for January 2011 in California, but what we are seeing is that the cream of the crop most competitive players in the field took some hikes in their rates as early as October 2010. So, if you got a stellar deal last year, chances are they are packing a punch to you this year.  The State Fund issued a release they are taking a 5.2% rate increase, which doesn’t sounds so bad except that they are the least competitive carrier we have seen out there.  We consistently reduce clients premiums by 50% if they are with the State Fund.

The good news: Four new carriers have emerged into the California market place as they want a piece of this action, whether they will be buying up the business by offering compelling pricing will be seen shortly as we see the December and January figures released. Some carriers we work with have not taken a rate increase and are not planning one for January 2011.

Again, as we have stated before, the way to get the best rates are to strategically market your account. We do this by accessing every market with agents that have the best relationships and exclusive relationships with those carriers. Only 1-3 carriers will provide a “blow the roof off” price quote, and the goal is to find the proverbial needle in the hay stack. Insurance companies HATE what we do, they check out our website and read it page by page. The reason, we drive the cost down and there is not an agent, or other service that accomplishes this task, you can’t over-charge if you have competitive leverage.

Want to find out if you are over-paying for your workers’ compensation right now?  What is your clerical rate?

You should be paying no more than .38 per $100 of payroll in California

Now, if you are paying more than .38 for your clerical rate – what is the percentage amount that you are over-paying? Take that amount off your whole policy premium and that is how much you are over-paying.

A perfect science – this is not a perfect science, but it has been pretty darn accurate when we use it with our clients but there are a few rules.

1) Your experience modification should be less than 1.30

2) You should have at least $500k in payroll

3) You should be a somewhat desirable risk. What is a somewhat desirable risk, it is better to state what is not a desirable risk – bomb mfg, toxic waste disposal – think of really tough businesses.

Keep in mind many agents sell their client as a tough risk and they are not –this mentality keeps you locked into them and keeps you from searching out a better option, because they have told you no one wants you. If in doubt of your situation give us a call or email us and we will tell you straight up for free if you’re a candidate for savings.

Are you over-paying?  Try our free fast calculator to find out – Calculator

 

Andrea@ratecraft.com

RateCraft.com

888-632-9900

My industry is one of those that today that I find myself a bit perplexed.  We contact businesses and try to give them an assessment of where they are in regards to the cost of their business insurance.  We have actual rates from our client base for the last 14 + years and they are real figures.

We tip our prospects onto what they should be paying for insurance based on how much property they have, sales volume, industry, workers comp best pricing, etc.  Now, do they call us and question us to how we arrived at those figures?  No.  What they do is they send this information to the agent who insures their account.  Now, I ask you, what do you think that agent is going to say?  Is it, “Yes, John we have been ripping you off for years?”  “Oops, sorry about that, we will fix it now”.  Or is it more likely they will say, “I don’t know how this person can say that without knowing your account” we do the best job we can at keeping your costs down.”

Quick Facts:

• 98% of our clients save money
• Our average savings is 35%, we have saved as high as 74%
• We don’t sell insurance – we don’t want to be your agent
• We only make money if we save you money – a one-time percentage of the savings

Why do you call the person that is possibly over-charging you?  If they lower it, are you really happy?  Did they serve you well?

This October we had one of our clients that we were working with and utilized our new calculator system – we predicted that they should be paying about $25,000 for their insurance.  Their current cost was $61,000.  The carrier they had was a good carrier and one that can be very competitive and yet, they were over-paying according to our data by over 50%.  The client sent me an email from his agent and it said, “We have sent the renewal application to several carriers to check the market place for your insurance coverage renewal, most have indicated they can not compete with the current carrier.”  I’ve got to tell you, I laughed when I saw it.  I see this all the time, every month.  Our client said, well good luck, and I know he didn’t believe we could come through, many of our clients don’t, it just sounds too good to be true and they keep hearing from their own agent that they can’t get a better deal and even other agents will tell them that same thing.  It MUST be true!

Our calculator works because it is a base line on what is available as the BEST rates, and then all we have to do is find one or two carriers that want the business willing to offer coverage at that best price available.  The agents are working in the wrong direction.  They are working on the premise of “what are you willing to buy at” so as long as you don’t know what you should pay, and no one else brings it to the table, then they have you!

For this particular account, the end result was we had two offerings one at $37,000 and one at $31,000.  The client had another agent bidding on it and he came in at $55,000 (with less coverage).  His own agent then miraculously dropped his premium to $38,000.  We did not get a quote at $25,000, but given the chance to work it again we could probably get it there in less than three years.  If your premium is high, it can take a couple of years to get it to it’s lowest level because the carriers will have to if they want it, but when it is already high, they know they don’t have to max credits to obtain the account.  We don’t have to know everything about your account to give you a pretty accurate prediction – just a few, simple basics.

Back to the original question, why do prospective clients call their agents to check us out?  What are you expecting to hear from them?   If we had taken this approach with the computer when it was introduced who would we have called, the person who sold us the typewriter?  “Hey, typewriter guy, this other bloke says he has this gizmo that will store all my data I type into it so I can use it again, save it, forward it, etc.”  “Do you think I should try it?  Typewriter guy, “hell no, our product is the state of the art gizmo”.  How many of us still have typewriters?

Who should you call?  Call some of our clients, most of them were all skeptical until we delivered.  All you need to do is ask.

The fact is, if your agent has done the best job available, then they shouldn’t fear us working on your account, since we couldn’t possible find anything better, right?  So why don’t they encourage it?  I think you know the answer.

Up, up, up go the premiums again with a proposed rate increase on the table for January 2010 of 22.8%. BizJournal 2010

So what can you do?

As you evaluate your business insurance portfolio should you anticipate tacking on 22%? Not necessarily. Keep in mind a rate increase was proposed of 22% in July 2010 and although many carriers did take a rate increase many were just as aggressive to write business as before and aggressive competition drives pricing down. The difference is in who the players are – every time the market makes a shift in pricing, such as an increase or a decrease in pricing, or even a shift in the economy such as lay offs, the market responds and the markets change. New leaders emerge and prior competitive leaders settle in to the mid-row players. We have consistently even this month lowered our client’s workers’ compensation premium by over 25%, so how is that possible if rates went up by 22%? The beauty of the game is to be on top of the market and knowing where to go and how to canvas the market. That does not mean calling every broker in town to bid on your insurance. Nor does that mean jumping ship every time an insurance carrier gives a better price. Here is your best strategy for getting the best rates on workers’ compensation.

• Have a discussion with your agent about the market. If your agent starts preparing you for a rate increase then it may be time for a change in agents. Your agent should be aggressively trying to keep your rates low. If they are already starting to sell you a higher price before they start shopping for you – that says they are not planning on winning this battle.

• Ask your agent to pick his/her top five markets they will be sending your account to for bids. An agent will only pick who they think will be the best and who they have the best relationship with – all the others they may not even present a quote from – they are on the bottom tier because usually your agent doesn’t have a firm relationship with them.

• Don’t be fooled if your agent gives you a list of 30+ insurance carriers they represent – rarely does an agent ever go to all of them and rarely does your agent have a great relationship with all 30. They give you the laundry list to impress you and many a client has been fooled by this tactic.

• Who are all the players in the market? Do you know? Find out and make sure you have an agent representing them to provide a quote to your company. Competition is what drives prices down and the power of negotiation lies in those competitive quotes.

• Start early. You need to get your account out to market ideally 60-90 days in advance with complete and updated loss history for the last four years. Anything less than this and you may miss some markets that could be valuable.

Are you getting over-whelmed yet? Stop wasting your time and your employee’s time by shopping your insurance. Shocked at this statement? It is doubtful that you or your staff are experts in the insurance industry. This is a tedious process and each agent will want to do their dog and pony show of how great they are compared to your current agent. To access the entire market it can take you working with over 10 agents, and each agent will want about 2-3 hours of your time. Is that the kind of time you want to spend on this? Each agent will want the same information from you and you will need to provide it to be successful. Why not outsource this? Do you handle your own taxes or do you outsource it? You outsource it, why? Because you don’t have the time to learn all the new tax rules, because it is time consuming. Well, you don’t have the time to find out who all the players are or the strategies for getting the best deal for insurance either. Do you even understand all your coverage’s? Or are you easily baffled by an agent that tells you you’re not classified correctly? Do you rely on the agent expert? The problem relying on the agent expert exclusively is that they are paid a commission based on how much you pay – so the more you pay the more they make – are you starting to see the problem with this method? You need a good agent that is clear. To keep your insurance program tight though it might be effective to outsource the services to a company that has your same interest aligned. Food for thought – otherwise make sure you set aside the time to do the foot work it will take to market your account thoroughly.

Where are the best rates?

There are over 11 million small businesses with between 1-100 employees and if you are one of them you make up a large percentage of the total businesses in the United States.  Now consider that most start out with an idea or someone else’s idea and you are very excited to get started, and you have so much to get done and one of the tasks is insurance, Ugh!  What is your first thought? “I hate insurance”.  Okay, second thought, what do I need?  Who do you get it from?  What is a fair price?

Let’s start with what do you need basics:

Workers’ Compensation

Needed when or if you have employees

Commercial Auto

Needed when you have a vehicle used in business outside of sales* calls

*vehicles need insurance regardless of business use but personal insurance

usually excludes delivery of products, carrying passengers for a fee.

Liability Insurance

Needed when you conduct business, but not required unless it is being

requested to secure a contract.  An example if you are leasing a building the landlord may want you to carry liability for the space you occupy.  If you manufacture a product, a store carrying your product  may want you to carry product liability coverage if someone gets hurt using your product.

Property Insurance

Needed if you have business property, equipment, but not required unless it is being requested to secure a contract.  An example – the bank you obtained a loan for some machinery, or building wants it to be insured for theft, fire, etc.  A landlord requires you to cover the insurance for the building you are leasing.

Business Income Insurance

You should obtain this coverage to protect your income in the event of a covered loss.  Not required usually by anyone.  This coverage is usually included in a BOP for very little cost.  If you have a brick and mortar business such as a restaurant – you should obtain this coverage.  It could take years to get the clientele back to a new location if yours should burn down.

Professional Liability Insurance

Needed if you are in a professional industry – Doctor, Lawyer, Dentist, CPA, Veterinarian, etc. Liability insurance to protect professionals for loss or expense resulting from claims of mistakes, errors or omissions committed – or alleged to have been committed – by the insured in his or her professional activities.

Health Insurance

Nice to have as it can attract good employees and certainly good for the owner to have to prevent any unexpected cost associated with a major illness – but certainly not mandatory – yet.

These above are the starter list but there are other coverage’s that are more intricate, such as employee health insurance, umbrella coverage, earthquake, flood, directors & officers, employment practices ,coverage within the policies for money, accounts receivables, tenant improvements, tool floaters.  Some of these can get added into the main coverage’s the others you need to seek out and a good agent or consultant can go through a check list of areas and help you decide if you need or what need.   Insurance has a wealth of products to sell you and most agents are more than happy to sell you any and all of them, so again it pays to be knowledgeable.

Where do you get the insurance?

You all know you get it from an insurance agent, that’s simple, but how do you go about getting the best deal with an agent – that’s really the question isn’t it?

Pop in the words small business insurance in a Google search or anywhere else and up comes plenty of information to shift through.  The number one thing to remember is, they are all paid for by insurance companies and agents wanting your business.  The insurance companies and agents are paid more if you pay more for insurance.  You need the agents, because you know YOU don’t know anything about insurance, but total trust is NOT in your best interest because of the way they are paid.  Just because an ad says they are the leader for small business insurance does not make it the most competitive.  For example, you can hardly turn on the television, radio or go to any website and not see an advertisement for Progressive or Geico, but does that mean they have the best rates for personal auto insurance?  I can tell you, it does not.  What it means is that they have a HUGE advertising budget and advertising works – for them, it does not necessarily work for you.  So, be smart and use your common sense about insurance.  Here are some tips.  You can find more tips in our new book  Secrets of Business Insurance

The best place to get insurance is from the insurance companies and so you must start with a strategic list of insurance companies and seek them out for a quote, and agents represent those companies.  Are you aware that in any given state there are approximately 20-35 mainstream insurance carriers for just the property/liability and workers’ compensation coverage?  Has any one agent or even two agents ever given you 20 quotes?  If you could see 20 quotes you would also see the vast disparity in pricing – it is really quite fun to watch how the same coverage can vary in price by so much – but the only time you will see it is if you see the entire market.  No one agent represents all the markets, even if they tell you they do – they don’t, they never have, they never will.  Call a Hartford agent and ask them if they represent Sentry Insurance (not Century) and vise versa, the answer will be no.  This is not just the case with direct writers and independent agent carriers.  Independent agent carriers rarely even if they represent a mass of carriers go to all of them, they have favorites and they have ones that pay them more commission.

What is a fair price?

If you can see at least ten quotes you can decide what a fair price is, it is the one that gives you the most coverage, with the best rated carrier, for the least amount of money, with an agent who you feel was knowledgeable and professional.  Our company is about to launch a calculator that you can log in a few bits of information and we can tell you instantly if your pricing is fair based on the best rates we have seen, but for the time being we do this manually on our site under “Where Do You Rank?” and it’s free, try it out.

For example – Commercial Auto Coverage with $1mil limits including Comp/Coll for a box truck -

• San Diego County – $800 per year, per unit
• Orange County – $1,100 per year, per unit
• Los Angeles County – $1,200 per year, per unit

If you are paying more than this – your paying too much and chances are your other insurance is too high as well.

I saw this article on the web and read the comments section where one woman asked a question about why her home insurance premium went up, I thought I could help.. Plus the article although well written did what most do – Tips on Cutting Your Insurance Costs – gives you a good title, some good basic information and then sends you to the money makers for the insurance industry.

http://abcnews.go.com/GMA/comments?type=story&id=8074065

The article lists that there are five comments but I can only see three and it does not show mine or the other two. I did not use profanity, I did not bash any company but I did mention the stats that I have posted here below about who owns the auto insurance market, and that it is not all that it seems. If you have a comments section and the people commenting are not using profanity or attacking an individual but does have some sort of opinion or questioning something isn’t that censorship not to post it? I know it is a private company and business – but I never said that GMA was bad, why can one woman talk about her home insurance going up after she bought it the next year but I can’t tell the reading market that the shopping sites only point you to who is paying them. It’s obvious information if you think about it.

I was watching the weather channel the other night and not one but two Progressive commercials came on the air, during the same commercial break. The first one touts that they will shop other companies for you there-by saving you time of shopping other sites or insurance companies. The second commercial from Progressive then says you can pick your price – you get to choose what you want to pay, sounds like Priceline – but it’s not. Both of these are ludicrous but what infuriates me more is that I’m watching this with another person who is successful, smart and they are buying it. How many of you are buying this crud? The auto insurance market is a $160 billion dollar business of which Geico (a Warren Buffet owned business) and Progressive spend over $700 million dollars in advertising with a return of over 70% of the market share. So, many, many people are listening and buying it. How can you avoid it? You receive mail every week from Geico, advertising from Progressive constantly and these same advertisers are dominating the media which then allows a simple comment to be censured.

Progressive does give you rates of other carriers such as Farmers, State Farm, etc., what is wrong with that? Nothing, but here is how is works, if Progressive wants you as a client the only other companies that come up are ones that are more expensive than Progressive. If Progressive does not want your business, you know if you have too many tickets, they pull up one of the more competitive options that will take you. What you are not seeing is that there are between 20-40 insurance carriers per state to shop from and two out of the 20-40 are by far more competitive and they know that you do not have the time to try to find those 2 out of 40.

Why doesn’t picking your own price work with Progressive? The real question is do you really want to take less coverage or drop collision coverage just to lower your rate when all you really have to do is find the right carrier? Wouldn’t it be better to find a carrier that would save you $400 a year but you could still have collision coverage, and good liability limits? Before you buy auto insurance you should decide what you feel is the coverage you need and want, then get quotes to support what you want.

Here is another site and story on helping you find the best insurance rates, the person who owns this site owns another one too 2insure4less.com and again in concept it is all good and it is a shopping site. There is nothing wrong with a shopping site but what is wrong is the likely hood of finding the best deal is only predicated on the most cost-effective company signing up and paying for this service.

http://www.foxbusiness.com/story/insurancequotesus-unveils-blog-make-shopping-insurance-easier/

http://www.kswt.com/Global/story.asp?S=11721824

These companies get so much attention it is staggering but yet I have never seen anyone state the truth, transparency or anyone really trying to educate the public. Here is the truth, I can tell you how to find the most competitive insurance carrier for you and it would not take more than a few minutes of your time. You would know exactly where to go and you would save the most money. If I give it to you for free, I will have no time to earn a living. Big dilemma so how do I help you while earning a living. My corporate clients started asking me if I could help them not only with their business insurance but on their personal insurance and so I started doing that – they paid me the same as how we did the business insurance 35% of the saved amount only if we saved them money and they were always happy to do that. We tried that with our personal site and the masses didn’t like it – why? Well, it is not quick enough for them (they are all use to Geico and Progressives expensive super fast sites) and they probably don’t get it because they have never seen anything like it, which makes it scary. It does work though. We are re-vamping our website, but we will now sell you the secret to find out where to get the best rates and we decided to make it cheap at least for a time and get your opinion and see if we can handle the load effectively. We are a small grass-roots company – we are not Geico or Progressive but we do have the knowledge and if you do not want the insurance industry leading you by the nose – then support truth and transparency. Our new price is $8.99. We will tell you who the top three carriers are at the least cost. If you are already insured with them you will not be charged, simple, and easy. Drop us an email from our site www.RateCraft.com and tell us you saw our blog.

If I’m being censored on the media now how long do you think it will take for them to shut my site down? This could be an interesting experiment.

RateCraft - Crafting the rates you want

RateCraft.com

“>Business insurance article

Every insurance agent out there laughs at this whole Marsh scandal because every agency out there has been paid kick-backs from their insurance carriers, it has been going on for years people. This scandal is nothing new – however, I have spoken directly with some individuals at Marsh who have told me that it was so much more than the kick-backs and that is why it came into light, but the only thing we really ever see on this is about what is standard business in this industry, getting paid extra commission or incentives for writing business with a particular insurance carrier.

The way the system works -

Independent agents obtain appointments with insurance carriers, the agents must sign agreements with these carriers, those agreements include such items as -

How much business the agency must write with the carrier, it can include incentives to the agency for writing a certain volume of business. It can also include pulling the appointment if the business is unprofitable, or not enough volume in premium is written. This is one reason insurance agencies do not represent more carriers they have to make sure they can write business with them or they would lose the appointment anyways.

The carrier will put how much support they will provide the agency, such as rating software, loans for business acquisition or expansion of sales, training, special discount they can allocate to clients or increased commission to the agency.

Many agents still withhold carriers they represent because they want to lead a client to buy from another carrier. This in the essence of the “independent agent” selling distribution to the consumer is in direct conflict, but I see it ALL the time. Not every agent or agency does this, but it is amazing how often this does happen. I find it blatantly WRONG. If the concept of an independent agent is to give a client several options on choice of carriers and coverage then I believe the client should see ALL the quotes available and the agent should do the due diligence of searching their markets.

Even if an agent does this it does NOT mean the client will even see the best quotes from those carriers. The reason, is because as with the contract that agencies and insurance carriers agree upon some agents have better relationships with their top five company’s that their bottom ten company’s and the bottom ten company’s won’t give their best rates to those agents, because they know where they stand with them….the bottom ten.

What the Marsh fiasco did do, and the only thing I see that this did, was it made insurance carriers state that they pay over riding commission or incentives to their agents. Take a look at any major insurance carriers web site and you will now see disclosure statements that say…”producers compensation disclosures” and it is detailed on what they receive. Here is an example from Travelers look at the bottom of the site and open up the disclosure link. Big deal, many other businesses are like this and I am okay with this being done. I have no beef with Travelers they are a good carrier and they can layout there compensation package anyway they want. Here is my beef, consumers need to stop thinking that their interests are aligned with their agent. I am not, absolutely NOT against agents either but most controllers, CFO’s, Presidents of a business need to be a little more savvy at looking at insurance costs and agents represent the insurance carriers first and foremost – FACT. The business or consumer is SECOND. I don’t know about you but when I am a customer, I want to be first on the important list. Who pays the agent? You do as a consumer of the insurance product and you pay a percentage of what the premium is – so….if the premium is $100,000 a year you pay at least $10,000 to the agent through the premium. If you could pay $60,000 for the same coverage and carrier then you would only pay $6,000 to the agent through the premium. So, let’s ask the question – does your agent want you to buy the $100,000 policy or the $60,000 policy? Simple isn’t it? The agent wants you to buy the highest price policy they can sell, they don’t want competition because then they will have to sell the lower cost policy. Not lessor coverage, just lessor cost. Lessor cost, lessor commission.

Agents hate what we do, so do insurance carriers – do you know why? Because we operate the most cost effective avenue for the consumer. Consumers win and insurance carriers get less money. Agents don’t lose working with us neither do carriers – they still insure businesses, they still receive premiums, they still receive commissions, they still receive kick-backs, they just get what is thoroughly market cost, not over inflated cost – and the consumer gets the best deal on the market. I like that!!! So should you. Which side of this fence do you want to be on?

As a consultant to our business clients I get involved in their matters concerning home and auto insurance. Recently I have been tearing my hair out dealing with insurance agents and trying to get my clients the best deal on their home insurance. I have been tearing my hair out because agents consistently want to over insure my clients’ homes. So, here is a great site to help you figure out what your home should be insured for and further more avoiding the hair ripping experience of dealing with these agents that just want your bucks.

• First, most of my clients seem to be over insured. This occurs because they have been with the same insurance company for years and with an inflation guard added to their home insurance the replacement cost has been going up each year even though building costs have been going back and forth – these inflation guards only go up. First item on the agenda is get at the real cost to rebuild the home. I have finally found a site that I think is pretty accurate if done correctly. See the site listed at the bottom of this article – this site has a free cost estimator and the best part is that it is not sponsored by an insurance company and it’s free.

• Second, many people believe they have a beautiful home – I know, I do. But, that does not mean that it was built with gold in many cases. Most homes are built about the same in tract homes and a bit nicer in some custom areas. Many of the semi-custom homes have the extras in the bath, kitchen and flooring but not in the drywall, frame, air conditioning. You may see some extras in the wiring (pre-wired for sounds systems, alarms etc.) So don’t inflate what you think your home will cost to rebuild. If you truly have a custom unique home then add this to the cost estimator – but think imported marble, elevators, glass walls, etc. Keep this in mind, insurance companies in most states DO NOT pay out the face amount of the policy, they pay to have the home rebuilt like it was before the loss. It is up to you to make sure it is not being over insured or under insured. If you over insure your home you will be paying premium for something you will never receive.

I have talked with many spec-home builders and when I give them what the replacement cost is for what some insurance companies come up with they laugh – saying it would never cost that much. Think about it this way too. If a tract home builder can sell the homes for $600,000 could the cost be more to rebuild that same home? What is the cost of the land? The land will not burn in a fire, it will still be there. Do you need to do excavation again? Do you need a new set of blueprints? You probably will need some modification due to changes in codes so you need some wiggle room in the policy. But, be careful not to over insure. Again, I like the cost estimator mentioned above it sounds about in line – I ran my home and some of my clients’ homes through it and minus a few costs, like excavation, excessive builder mark ups it seemed pretty reasonable.

• Third, look for the right endorsement – the best is full guaranteed replacement cost – which means what ever it takes the insurance carrier will rebuild the home. This is great but many carriers that still have this then hike up the replacement cost of the home and will not insure it for less than their estimator and it is usually very high. So another to look at is 125% or 150% then obtain your estimated replacement cost and factor the endorsement into it and you should be fine. Don’t forget to review it every so many years and adjust it – usually down because many slap on the inflation guard as a matter of policy and then it gets too high and most agents don’t lower it unless you ask.

Keep in mind, an agent is great to work with you need the guidance but they are paid many times in commission so the more you pay the more they make. I am appalled at how may agents start with a reasonable replacement cost and then start changing the figure up ward along with the cost. You are wise to remember this when looking at your insurance, an outside consultant is not tied to any insurance carrier, although few, are available to guide you through the process.

Free cost estimator site: http://www.building-cost.net

Andrea Luoni
CEO
www.RateCraft.com – for business
www.RateCraft.net -for personal

State Compensation Fund
American Home Assurance – AIG
Zurich
Zenith

YOU BETTER KEEP READING -
Are you insured with any of these carriers? Chances are at least some of you reading this are insured with these carriers. They are all large, somewhat reputable, carriers but did you know NONE of these are usually the most competitive? At least one of them has superior service. Do you know which one that is? These are the carriers that have the most market share. That means 37% of businesses in California are insured with these carriers, over a third of California businesses.

The top three most competitive carriers only insure a total of 3.7% of the market. Do you think you are insured with one of those? Chances are that you are not. Do you know who they are?

I like statistics because they support what we tell our clients all the time – we can save you money 98% of the time. I get prospective clients all the time asking me how you know you can save me money. It is because we have been in business for twelve years and we just simply do. We could not offer our service with a zero cost factor if we could not perform. The other reason we save companies money is with statistics such as these, finding the 3.7% that have found the hot market is hard and rare, even if we do – there is still money on the table – we just can’t save them 50% but perhaps it is just 10%. The rest of the businesses that are not aware of the availability of savings are jeopardizing their companies’ assets by over spending. You do not have to spend more to get more. You do not usually even have to change agents or carriers.

Here is another kicker for you. This is just workers’ compensation. Which is usually a heated discussion for most business owners, most pay more attention to this line of insurance – the property and liability insurance is a whole other issue where most businesses are over paying by even more. You just don’t know it. It pays to be knowledgeable.

Workers’ compensation rates are expected to go up in July, do you know where the hot markets will be then. We do and we are here to help. http://www.ratecraft.com

Now, let’s have some fun – take the poll below – is everyone reading this in the 3.7%? If you email me I will tell you if you are with the top 4 most competitive carriers. Andrea@ratecraft.com

2007 statistics from the CDOI

Do you think you have found the most competitive workers comp carrier?(online surveys)

RateCraft 1-888-632-9900

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