When is Enough, Enough?

I recently came across a company that was interested in receiving a comparative quote.  They were a large commercial construction company subbing out most of their work.  After reviewing their current insurance program, I found out they were insured with seven different insurance companies.  Yes, SEVEN.

How many insurance companies do you have insuring your business?  One insurance company?  Two, three or even four insurance companies?  When is enough, enough?


Now, in unique or high risk situation, I can see seven insurance carriers being necessary.  An example of this would be a long haul trucking company or a large residential contractor.  Specific class codes that have a history of large claim payouts or high risk scenarios are most likely going to split up their book due to necessity, not choice.  Not many insurance carriers are willing or able to take on the amount of risk that's associated with that particular business.

On the other hand, some businesses are more strategic in their risk management strategies and purposely spread their insurance books out.  They may not want to place all their business with one carrier in an effort to keep the upper hand with the insurance companies.  For example, if you were to place your general liability, excess liability and workers compensation with one insurance company, that insurance carrier has a lot of power over what they deem acceptable or not for your business.

There are some perks to keeping your business with one carrier.  Special discounts can be applied and credits given.  In the end, it really all depends on the strategy and risk management style you're comfortable running your business with.  

But, seven insurance carriers?  Was this necessary for a very clean commercial contractor subbing out most of his work?  In my opinion, probably not.  It creates a lot of work and often confusion come renewal time between you and your broker.  TIP:  When your insurance renewal comes up this year, don't be afraid to question your broker on why you're are with particular insurance carriers.  The goal is to create clarity.  If you're not satisfied with the answer(s), maybe it's time to give another broker a shot.  Remember: lazy brokers ultimately cost you and your business money!