How risk managers can slash insurance costs…Auto insurance shopping increases, but consumers display less brand loyalty

How risk managers can slash insurance costs

Compiled by Insurance24

HARARE, Understanding what your insurance company wants to see from you around renewal time can often feel like little more than a guessing game. All risk managers would like a better renewal price and an easier process – but how do you go about it?

Corporate Risk and Insurance asked Eric B. Copple, CIC, CRM, a risk management adviser for Arthur J. Gallagher & Co, about the top tips for risk managers during the insurance renewal process – as well as what not to do.

According to Copple, the number one way to get the most out of your insurance renewal, including the best price, is to tell a compelling story to your underwriter.

“Insurance is one of the only things you buy in which how you present yourself affects the cost. You buy a hamburger, they don’t weigh you. You buy a car, they don’t look at your tickets,” Copple told Corporate Risk and Insurance.

For risk managers, thinking carefully about the narrative that you are presenting to your insurer is the key way to manage the process, and hopefully influence your underwriter to give you the best price possible.

It’s essential to put across a narrative that “truly shows” what you are doing to effectively manage risk – otherwise, all that your underwriter will see is the exposures and claims data.

“What I have really found through my experience is that the story is tremendously lacking… That really gets lost in the sales part of buying insurance,” Copple said.

“How are you presenting yourself to the marketplace? What motivates an underwriter to give [you] pricing credits should be one of the driving factors. How are you going to convince people to hold your bag of risk?” he continued.

But what exactly are underwriters looking for? According to the executive, your insurer wants to see a clear set of systems which have been put in place to manage risk.

“Creating systems is key to having effective behaviors,” he said. “If we are going to tell a compelling story, we need to be able to communicate effectively what we are doing to manage behaviors.”

Most risk managers can easily identify the risks in their company, but fewer can provide hard evidence of the systems that are in place to manage them.

“If you can get C-suite people to build systems to back up their mission and vision, those can become the basis of their defensive strategy, and all of that is extremely sellable to underwriters,” Copple said.

But while demonstrating the systems you have in place is the best way to win brownie points, it’s vital that risk managers don’t make bigger claims than they can back up.

“I would say the no-nos are having written processes in place that you don’t actually perform in reality. That’s a big deal from a lawsuit standpoint, but also as a company you should never put in writing that you will follow something that you aren’t. Don’t present something that you aren’t actually doing,” Copple said.

Ultimately, underwriters are driven by the same fundamental concern that most of us are day-to-day in our jobs – making the right call.

“[Underwriters] are just like anybody else, they want to keep their job,” Copple said. “They are worried about the potential of a big claim, and they have to price accordingly – unless you can help them build that file with effective systems to justify the credits that they can give.”

Auto insurance shopping increases, but consumers display less brand loyalty

HARARE, Although auto insurance shopping volumes have been steadily increasing in recent years, customer loyalty to specific insurance brands has been largely dismissed, a new report by LexisNexis Risk Solutions found.

LexisNexis examined 3.5 billion consumer shopping transactions since 2009 to prepare its report, identifying any key trends throughout the years that could help insurers better sell their products.

“When it comes to buying insurance, today’s consumers no longer exhibit the brand loyalty of even a decade ago,” the data aggregation company commented on its report.

LexisNexis attributed this decrease in brand loyalty to the continued investment in insurer ad spending, plus the ability to easily quote through websites, apps, and comparative ratings sites – all these factors “empowered consumers to shop and switch their insurance more quickly and easily than ever before.”

Some important findings of the report include:

  • Insurance shopping volumes have grown each year since 2009
  • 75% of households have shopped for auto insurance within the last five years
  • Nearly 40% of all households have shopped for auto insurance within the last year
  • Homeowners are three times more likely to shop for auto insurance when they list their house for sale

“Consumers are shopping insurance with greater frequency,” LexisNexis summarized in its report. “Even traditionally stable, high-value consumers are shopping at higher rates. This gives [insurers] the opportunity to make [their] offerings shine to a larger, more diverse and more active market.”