How Construction Companies Can Reduce Insurance Costs by Up to 55% Annually
Charles Specht, CIC, CDA
Helping insurance AGENTS build a $1,000,000+ Book of Business by connecting them with willing insurance BUYERS 🎯 CEO @ Permission Network & Constructive Risk 🎙️ Host @ The Millionaire Insurance Producer Podcast
Construction companies, Subcontractors, General Contractors construction companies, and other construction-related businesses tend to spend a lot of money each year on their insurance premiums, when they could be spending up to 55% less each year. Frankly, most of them spend way too much money for their insurance policy renewals but they don’t possess enough “insider knowledge” of the insurance renewal quoting process to make the best decisions when the time comes. Or, rather, their insurance broker(s) has not made it easy for them to determine which insurance carrier is offering the best insurance quotes overall.
Renewing Your Insurance Policies Shouldn't Be a Mystery
But, if you don't know what to watch out for — it will cost your construction company too much premium!
Problems CONSTRUCTION Companies Encounter When Gathering Insurance Quotes
One of the hurdles that many construction companies experience when it comes to bidding out their insurance policy renewals is that they assume the insurance quoting process works exactly like the construction industry. Typically, a general contractor or project manager can requests bids from multiple subcontractors and receive dozens of quotes. Whether unfortunately or fortunately, the insurance industry does not work this way.
Insurance carriers will only ever work with (accept a submission from) one broker per insured. Therefore, when a construction company allows Broker-A to submit to Carrier-X, Carrier-X will never accept a submission from any other brokers that year on your behalf. Therefore, it is highly important for construction companies to become better informed of the insurance policy renewal process in order to obtain the most favorable terms and competitively priced insurance quotes available in the marketplace.
Here are 7 things a CONSTRUCTION Companies should do to save money on their renewal insurance quotes
1. Be sure to thoroughly interview the brokers before you allow them to quote your insurance policy renewal(s). You need to be certain they understand construction insurance and the coverages necessary for contractors and other construction-related businesses.
You will need to itemize the carriers they represent directly, which carriers they can only access through a wholesaler or other intermediary, which wholesale surplus lines broker(s) they prefer to work with (and why), and which insurance companies each of those wholesale brokers would be accessing, so as to eliminate multiple submissions to the carriers (which is a disastrous problem that only leads to negative consequences for you). I would also counsel you to have the broker(s) tell you how many clients both they and their agency have with each of the insurance companies on their list, as well as how much annual premium they currently have with each carrier.
HINT: Your brokers will likely represent a lot of the same insurance companies. This can be a problem. What you will need to determine is which broker is most likely to negotiate the best deal with each insurance company on your behalf. Granted, it’s not an easy task to figure out or execute, but getting this part wrong will likely cost you thousands of dollars due to inflated premiums on your renewal quotes.
2. Assign the insurance markets to each broker you use. You would be wise to use more than your current broker (even if you fully expect to stay with them for the renewal), or at least figure out how to introduce competition into the quoting process to “keep your broker honest.” It is not in your best interest to allow your current broker — no matter how much you like him/her — to know there won’t be competition for your insurance policy renewal.
Moreover, don’t allow your current broker to “blanket” the marketplace and “block the markets.” It is easier for a broker to show up with a more expensive quote when he or she knows you don’t have any options other than what they bring to you.
Furthermore, be sure to give each broker who quotes your insurance full access to ALL rates, exposures, and the expiring policies themselves. You need to put everyone on an even playing field. Don’t think you’re hurting your ability to receive lower quotes if you show competing brokers what you’re currently paying (your current broker is using all that information, after all). In fact, withholding the exposure data actually hinders the competing brokers from getting a better insurance policy renewal quote on your behalf.
3. Set strict deadlines upfront for when you expect to receive each and every proposal from the brokers. I would suggest setting a deadline of no less than ten (10) days before your insurance policy renewal date. Have the brokers agree, in writing, to abide by this very necessary step. You will need time to review and consider their proposals so this cushion of time is critical to the process of negotiating lower quotes.
In fact, if your broker often shows up each year “last minute” with the quotes, please understand that nine times out of ten that is a tactical move on their part to push you into making a last minute decision. Brokers often receive the policy renewal quotes weeks in advance of when they finally meet with you to present their quotes. So, set a strict date for the broker to have their proposals presented to you.
Moreover, don’t be shy to threaten brokers with the fact that you’ll take away their markets via a signed Broker of Record Letter if they refuse to follow the rules you are setting.
4. Require that each broker give you a complete copy of each quote he/she receives, as well as any written confirmation from the insurance carrier directly for any declinations or refusals to quote they received. Some brokers, while trying to pacify the underwriters they have close relationships with, will “block markets” and not even follow up with those underwriters for their quotes. When you receive the first round of quotes from all of the carriers, you should be able to determine what commission percentage the broker will be receiving from the insurance company, and you can further ensure they aren’t charging you a broker fee on top of it.
5. Once you receive all your quotes, create a Cost-Comparison Spreadsheet between them and make a decision on which quote you would prefer to bind coverage with. Actually, make the brokers do this for you. Tell the brokers that you want a side-by-side comparison — on an excel spreadsheet — that highlights the pro’s and con’s that each quote they are presenting is offering. Frankly, this step is very important because you truly have no way of knowing which carrier is offering the better Terms & Conditions if you can’t review and compare the quotes side-by-side.
6. IMPORTANT: Negotiate, Negotiate, and then RENEGOTIATE some more. It is amazing how many times a broker shows up with a quote and the insurance buyer (the construction company) agrees to purchase it without any negotiation on either the terms or the premium/rates. Be sure to tell — not ask — your agent that you want to see another 17% (for example) off the quote in question. Do not give the broker any “buying signals” just yet. Make them fret and stress and work for your business.
Do not merely bind coverage with a broker or carrier during the first round of quotes. Most underwriters “pad” or “inflate” their quotes, with the knowledge that they could reduce the premium more if need be. As a general reference, there is usually another 10% or so that can be taken off the rates/premium, if someone would but only ask for it!
Have the broker give you written confirmation, from the underwriter directly, of what the carrier can or can’t offer for premium credits/discounts. Do not take their verbal word for it. Get everything in writing! Then, renegotiate a bit more. There is no downside for you on this. You’ll often get what you ask for and you’ll certainly receive nothing if you don’t negotiate.
After you negotiate additional premium and rate reductions and any better terms and conditions (less exclusions, more favorable endorsements, etc.), bind the renewal coverage with the insurance company of choice.
7. Establish a required 12-Month Timeline of Services with the broker(s) you are binding coverage with. Actually, you should be requiring this information from them way back in Step #1 above, but here you need to hold the broker accountable to actually provide the services they promised you in exchange for your business.
Be sure to negotiate with the broker and don’t let them push you around. Demand excellent customer service or threaten to assign your policies to another broker via a signed Broker of Record Letter if they refuse to comply. It is important to know that you — the steel company — are the policyholder and you hold all of the power and authority in the relationship. With one signature you can terminate them as your broker if they don’t provide the services that your steel construction company needs.
I Know It’s a Lot to Think About
Are you feeling overwhelmed with all of the details regarding the insurance policy renewal process? Are you feeling lost yet? I know, there is a lot to know and to do and to beware of. You may be feeling overwhelmed and not know how you can accomplish all of that (by the way, there are at least a dozen or so other things you need to do in the quoting process but I didn’t want to overwhelm you even more at this point). If you feel like throwing your hands up in frustration, I get it. You’re not alone.
But I do have good news for you. That’s where we come in.
A Stress-Free Insurance Policy Renewal Process
Stress-free. Yes, it really is possible!
You’re a competent business owner in the construction industry. You shouldn’t have to feel like brokers are hiding things from you or that you’re paying more premium than you need to. That’s why we’ve crafted an insurance policy renewal experience you can look forward to and feel confident about.
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Seriously, that’s what we do for you.
Our strategic process of negotiation (and targeted Renegotiation) with all your brokers and underwriters will put you back in the driver’s seat. When the dust finally settles — you’ll be assured that you bound coverage with the best broker, purchased the best policy available, and paid the least amount of premium possible.
Our 10-Step Value Proposition for CONSTRUCTION Companies
(aka: What you’ll receive from Constructive Risk)
1. Your construction company will receive a step-by step, comprehensive plan of what we’ll be doing on your behalf from start to finish, throughout the quoting process, and during your 12-month policy period(s) after the renewal is complete.
2. We’ll interview your current broker as well as invite other pre-qualified brokers from our extensive Broker-Network to offer quotes on your behalf, and set specific expectations for the quoting process.
3. We’ll strategically assign the best markets to the best brokers and ensure all parties are using the same exposure data. We’ll also ensure they utilize this exposure data to create the best applications so that their submissions to the insurance companies will make the underwriters want to seriously compete for and win your business.
4. We’ll be in constant, daily communication with the brokers to determine their progress and will c/c you via email on any and all pertinent information. You’ll always be updated from us and will know what all of your brokers are doing (or not doing).
5. We’ll set specific requirements regarding what the quotes and proposals need to contain (so we can adequately compare them with you).
6. We’ll create an easy-to-understand summary report for you, highlighting the main pro’s and con’s for all quotes received.
7. We’ll continue negotiating and renegotiating with the brokers and underwriters, convincing them to further “sharpen their pencils” so that we receive the best T&C's with the lowest rates possible.
8. We’ll summarize the services each broker would provide to you and give you our recommendation for which broker to use and which carrier(s) to bind coverage with.
9. We’ll create a personalized 12-Month Timeline of Services for your broker to follow and ensure they're providing the best services possible throughout the policy period.
10. We continue to monitor your broker’s efforts all year long and — when necessary — remind them to provide the services they promised and at a level YOU expect them to.
It is for reasons such as these that our clients save up to 55% on their annual insurance costs!
PLEASE NOTE
Here at Constructive Risk we do NOT sell insurance. We are not appointed with any insurance carriers and we do NOT receive any commissions or “kick backs” from the carriers. We’re a wholly unbiased, fee-based insurance consultant — paid directly by you, the client — so our objectives are 100% fully aligned with yours.
Testimonial from One of My Construction Clients
Here is what one of my contractor clients recently said about my consulting services for them:
“Charles, not only did you keep communications open with us but we were also continually being informed of your progress with our insurance agent. Our savings for the annual renewals was in the thousands and we are so grateful. We are so impressed with your services that we would like to retain your services again to represent our interests with another year of renewals.” -Scott Gochnauer, Gochnauer Air Conditioning & Heating
Your Next Step In the Process (How to Hire Us)
If you’re ready to begin reducing your insurance premiums by up to 55% annually then it is time to take action. If you don’t take the necessary steps to hire Constructive Risk as your Offsite Risk Manger, then your construction company will likely be paying more for insurance this next renewal than you could be, the terms and conditions of your quotes could be too restrictive, and you won’t have any peace of mind with the process.
Hiring Constructive Risk to manage, guide and “police” your broker(s) throughout the entire insurance policy renewal process will save you a considerable amount of time, will save you a lot of premium (up to 55% annual savings), and will practically guarantee you peace of mind with the final result. After all is said and done, hiring Constructive Risk just makes good fiscal sense for your construction company.
Here’s how to get started today:
Step 1: Schedule a Free Consultation
Step 2: Choose the Right Consulting Package for Your CONSTRUCTION Company
Step 3: Sit Back and Enjoy the Benefits
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