5 Common Mistakes Directors Make on the Company Insurance Renewal

Needless to say (but clearly I'm going to), insurance isn't the top priority for your typical company. How often you have to think about it generally depends on the size of the company, the industry the company operates in and how aggressively the business operations require change during any given year.

Whether that is once per year at renewal or several times per week, chances are there are other, more exhilarating aspects to your job you would rather be doing. The purpose of this article isn't to have your typical dialogue where an insurance agent tells you that you don't focus on the insurance enough. Of course you don't. It's important but boring. A necessary evil.

This in many cases, however, breeds problems people don't know they have. Despite it's mind-numbing nature, people acknowledge it's importance and subsequently try to get lower premiums whilst spending the least amount of time possible. The problem is they don't properly understand how the insurance market works (why would you?) and they end up spending more time than they intended to achieve very little.

Here are 5 common mistakes to avoid, coupled with the solutions to actually achieve what most people's main goal is. Best results, minimal time spent.

Getting alternative insurance quotes from different brokers every year

Companies do this generally because they want to keep expenses to a minimum. So, much like your car insurance, you have a look for the best deal each year. With businesses though, the market is a lot different. It's a lot less transactional as there are more variables to how a business operates and the more high risk your business is, the fewer insurers there are who will cover you. If you have had other brokers review your insurance the previous year, you have already tested the market for the best deal. To do it again the next year is usually a waste of time as the market is unlikely to have changed.

Solution: Only review the insurance in consecutive years in the following circumstances:

• Your premium dramatically increases at renewal
• You had a bad experience with your current broker
• Your business has changed significantly within the last year

Otherwise, its best you challenge your current provider around every 3 years as a minimum. Don't waste your time doing it every year.

Using multiple brokers to review your insurance instead of one other

You may have heard that you should have no more than 3 brokers reviewing your insurance at any one time. This is because most brokers know the best insurers to go to and insurers will refuse to quote if they see your submission from too many brokers. In short, they see their chances of winning/retaining your business long term as slim so they don't want to waste their own time.

The other problem is that, if you have 3 brokers in the market for example, you have 3 brokers getting asked follow up questions by insurers and you have to constantly repeat everything 3 times. Or more, if you've involved more. The form that you filled in is never "all you have to do", insurers will always have questions and the quick exercise you initially wanted turns into multiple disturbances every day with different people wanting more information.

Solution: Have a quick initial chat with multiple brokers without committing to them so you can gauge their validity. Then pick the one you have the most confidence in and let them go to market on their own (alongside your current broker). They will still come back to you with more questions but at least it's only one and not 3/4, who are probably approaching the same insurers anyway.

Not giving enough information to a broker initially and paying for it later

This links to the above point. To re-iterate, any form you fill in from another broker is not the end. There's always a certain amount of information an insurer will need to provide a quote, lets call this 100%. Even if you've spent time filling in a form, this may only be 60% of what the insurer needs. The problem people have is they set time aside thinking that's 100% of their job done. So the extra 40% comes in the form of several follow up calls, emails etc. which interrupts time you've allocated for other tasks, or you just never get round to providing it all because you are too busy. In the end, you've spent a lot of time and effort and the results are either minimal (because the information is incomplete) or non-existent!

Solution: A good broker who regularly deals with your trade knows the follow up questions insurers may ask. Set aside half an hour/an hour, go through everything with them over the phone, via Teams or face to face. That way, when insurers ask questions the broker can either answer them without having to consult you or they've included the answers in their presentation already so the insurer doesn't need to ask. They may have to come back to you on a couple of other things, but they've covered 95% rather than 60% so any further interruptions are kept to a minimum.

Not giving the alternative broker your premium at last renewal

Some may think, of course you would say that. There's a stigma that some brokers will take your premium, knock a small percentage off and you won't be certain you've seen the full saving. The stigma is real, some will, if you give them this years renewal premium. Last years premium is out of date. The company has changed, grown/regressed etc. since then. Even if it hasn't, an "attacking" broker shouldn't risk not putting their best premium to you first as they know your current broker is also in the market, knows about the other broker and is doing their best to retain your business. All you are doing by giving last years premium is giving both brokers a level playing field.

Solution: For your 2024 renewal, give the other broker the premium at the start of the 2023 renewal. However, make it a principle that you will only accept the first premium put forward to you (so long as there's no changes that need making to the cover, terms etc). Some brokers may put a premium forward to you initially to test the waters, in the hope you divulge what your current broker has come back with. Now they know where their premium needs to be and your fear was justified, so be careful not to give too much away once you've given the attacking broker what they need.

Having other brokers dictate your renewal process to you

This summarises a lot of where bad practice comes from in the previous points. Many companies have an abundance of brokers contacting them promising the following things:

• They can save you money
• They are experts in your particular industry
• Just fill in this form it's quick and easy
• They have access to markets others don't
• It's always healthy to get an alternative quote

When you've got so many brokers asking for commitment by running the same dialogue, how on earth do you decide what to do for the best? Who do you trust? Who's information is right? What usually happens is all the emails go into a folder, renewal comes up and you choose the path of least resistance based on what you have been told. So off you go down the rabbit hole of wasting a lot of your own time for little gain, which is the complete opposite of what you meant to do. The reason why, is you've let the other brokers dictate your process, rather than deciding "this is what I'm going to do, this is the best way to do it". Which is the whole point of this article, you don't have the time or knowledge of the insurance market to know what that process should look like. So here it is.

Solution: Follow this process:

• Out of all the brokers contacting you, pick 3 that seem viable.
• Have a quick chat with all of them and choose the one you trust the most.
• Arrange half an hour/an hour with them to give all the information they need including last years premium. Specify that you will only accept their first and best premium (based on the cover you need).
• Review the proposals from your current broker and the attacking broker, then pick one to proceed with.
• Don't go through the process again for at least another 3 years unless there's significant change to the business, your premium increases dramatically or you have a bad experience with your current broker.

I hope you found this useful. There are obviously a lot of other factors to be mindful of but these are 5 of what I feel are the most important from a time efficiency perspective.

If you have any questions or you'd like to see if I can help in any way at your next renewal, drop me a DM on LinkedIn and I'd be happy to have a chat.