We began this series chronicling how municipal entities in Pennsylvania have lowered their expenses taking advantage of the Buyers Market for municipal insurance.
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Today we will be briefly examine the first step in developing a Common Sense Strategy to purse before considering soliciting bids for your Property and Liability Insurance.
Before you consider taking you coverage to bid, request of your current carrier a copy of your loss runs – the claims your municipality has occurred – over the past six years including the current year of your expiring policy requesting of your broker a claims review. Additionally, in your request for your loss runs and a claims review make certain to note you intend to solicit competitive bids from both traditional and alternative carriers.
While this “common sense” strategy to lower your expenses for coverage costs you nothing, the benefits can be extensive in both the short and long term.
Within the insurance industry, loss run requests send off the proverbial red flag. The industry’s long standing soft market which remains in a cash underwriting mode places a very high value on premium retention for all accounts generating a surplus from combined ratios.
Or in English, if your municipality isn’t costing any insured more than they are collecting in premium; they are going to make every effort possible to retain your business. Those efforts often come in a combination of forms which have tangible value and are being shown throughout the municipal sector to translate into reductions of premium ranging from 4% - 40% in expiring premium.
Three years ago, a larger Borough went to its then current carrier and requested six years of loss runs and a comprehensive claims review while notifying their carrier they intended to seek alternate coverage. Their expiring Property and Liability coverage inclusive of Police and Professional lines was basically $200,000.
With the “red flag raised”, their carriers account preservation plan kicked into high gear. The local broker appeared in person at the Borough building just to touch base. A Claims Specialist called the Borough manager to set up an appointment to review prior claims. A Loss Control Engineer called both the Public Works Director and Police Chief asking for permission to investigate if perhaps it was time to consider changing standard operating procedures.
If the story ended there, the Borough obviously would have expended few resources yet came away from the experience with several valuable tasks accomplished including; modifications of their policy including changes in property values never updated since the last industrial appraisal, review of open General Liability claims as well as the action plan being under taken for resolution and refinement of operating policies to reduce risk exposures.
By the time the carrier was done modifying the Borough’s policy, eliciting their cooperation to mitigate open claims while improving their liability exposure, the Borough was told, “You should be seeing a major drop in your renewal premium this year of at least 15%.”
Fortunately for the taxpayer’s of the Borough, this story doesn’t end with the pie-crust promise of what would have been a $30,000 savings against their expiring premium. To read about the second common sense strategy in taking your property and liability insurance out to bid, stop by later this week and we will continue our path toward lower expenses and higher revenues.
Until then, have a great day.
By Richard A. Mathews
www.resurrectingcommonsense.com
