In our last essay, we discussed how to begin the Common Sense path to lower expenses for your Property & Liability Insurance by requesting your loss runs, reviewing your policy
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and examining your claims with your current carrier. We noted the specific example of a large Borough, whose expiring premium was $200,000 being told by their current carrier after their retention team had been called into play,
“You should be seeing a major drop in your renewal premium this year of at least 15%.” Today we examine the next common sense step on the path to lowering your expenses in putting your Property & Liability Insurance out to bid, soliciting alternative quotes. Before we proceed, I want to address the concerns of the majority of municipal entities across the Commonwealth.
For decades I have listened to public officials as well as public employees express significant reservations concerning soliciting alternative insurance coverage. I fully understand their reservations ranging from; They are not comfortable discussing insurance coverage,They don’t believe their premium is sufficient to warrant the time expended to put it out to bid,They truly feel all insurance carriers are the same simply overcharging them in good times of low claims and dropping them if a claim is actually ever filed.
My response to all of the above has remained the same;“I do understand and respect your concerns.”My question to every municipal entity in Pennsylvania remains,“Can you afford not to at least every five years review your policy coverage, claims history and how your premium compares to your fellow municipal entities as basic due diligence to your respective community?”
Returning to our topic for today, I opened this series promising there would be no commercials. I fully intend to keep that promise today and in the future.“Asking your neighboring municipal entities, who insures them and are they satisfied with the service as well as the cost of their insurance,” is the second common sense step down the path in lowering your property and liability coverage.
While this strategy may appear too naïve to pursue, I can assure you, a few telephone calls to municipal entities within your region of Pennsylvania who have similar needs is all but guaranteed to bring up the good, the bad and the ugly side of attempting to take your coverage to competitive bid.
Throughout the commonwealth there are a wide array of traditional carriers, participating carriers and a variety of insurance pools who present an equally diverse range of benefits available to municipal entities.
Placing your property and liability insurance out to bid is not a cookie cutter process where every potential coverage option is equally viable for every municipal entity. There is no point in pursuing a bid from an alternative carrier whose underwriting standards exclude covering municipal entities below a certain premium threshold.
There is no point in pursuing a bid from an alternative carrier who doesn’t provide the claims review or loss control services you deem necessary. There is no point in pursuing a bid from an alternative carrier who doesn’t have a proven track record you feel confident in. I would be remiss to not additionally recommend every municipal entity asked their solicitor for their respective opinion concerning potential carriers to select bids from.
Your solicitor will frequently be able to recant to you their dealings with insurance carriers while handling claims which became litigated. That knowledge may prove extremely valuable. Your solicitor works for you and has a vested interest in you obtaining the best coverage available. Additionally, your county or regional municipal affiliations as well as state associations can prove to be valuable resources.
In summary, the more information you can obtain from municipalities with a similar risk profile concerning their coverage carrier, the greater opportunity you will have to lower your expenses while providing the most comprehensive coverage which is economically possible.
Our next step down the path will address the specifics of when to begin the process of taking your coverage to bid, what are the relative strengths of different type of carriers and how best to handle the bid review process.Until then have a great day.
Richard A. Mathews
www.resurrectingcommonsense.com
