Lazy Insurance Brokers and How They Cost You Money

Recently I've been seeing a trend with clients that are moving their business over to me:
Their prior commercial insurance broker was lazy.
Additional insured's were left on policies from years past, payroll amounts were off, additional coverages not needed were included, claims were not pushed to be closed....all costing my insured money.

Definition of lazy: causing idleness or indolence.

To me, the most detrimental side effect of being lazy is not being innovative for the well being of your clients. Even verbalizing the word "idle" gives me the creeps. After all, I have a tough enough time sitting through an entire movie without getting up to do something else.

I recently placed a manufacturing brokerage that was based on gross receipts. They were a 5 person company that grossed over $7,000,000. They projected that they will reach $10,000,000 this coming year. Now, whether they gross $7,000,000 or $20,000,000, it does NOT increase their risk within that 5 person office. The same 5 people are walking in and out of that office every single day. Not an employee more, or an employee less. So why would their General Liability be based off of their revenue? It made no sense to me and I questioned the insurance carrier on behalf of my client.

TIP: Just because an insurance policy was based off of gross revenue or payroll, doesn't mean it HAS to be. And this is where a lazy, non-creative insurance broker becomes idle. Most brokers believe that every risk IS based off of gross revenue or payroll. If you have a broker that thinks this, it's time to step out of the box and get a second opinion.

Each company poses unique risk. No two companies or businesses should be evaluated in the same cookie cutter way. For instance, a real estate portfolio can be based off of square feet and locations. A gym can be based on memberships and locations. A ski resort can be based off number of lifts and average number of tickets sold within a season. All of the rating noted above never mentioned gross revenue or payroll. Shocking - I know!

To think that every year my insured's exposure is the exact same from the year before is extremely naive. And if you are dealing with a broker that isn't willing to review your exposures and question your premium rating basis for your business at least annually, you may be leaving money on the table year after year.