Who Needs Insurance Help

The owner of a high tech company wrote me a note yesterday asking what issues he needs to consider as he moves forward with a plan to utilize contracted consultants. I told him that he has many issues, including:

--Finding the right professional liability insurance
--How will liabilities flow from your consultants?
--What contractual issues arise?
--What insurance should you require of your consultants?
--How will you know if the insurance the consultants buy meets your requirements?
--Are your consultants really employees or contractors?
--How do individual state laws affect your need for workers' compensation?

Insurance Bid Process

I'm urging my clients to bid their insurance. The past few months have proven to me that insurers and agents do a better job of pricing renewals when there is real competition for the business. A few months ago I brought this point out in this newsletter. The September and October renewals have just confirmed that point - in spades!

I had several full bid projects. They resulted in great premium savings for my clients - as much as 40%. Coverage also improved.

I had several clients who renewed coverage with their current agent and insurer without competition. In most of those cases, the incumbent insurer asked for a premium increase. I had to kick and fight to get a renewal at last year's rates. Granted, if the account went to bid last year there may have been less room for movement this year. However, the marketplace clearly reacts to competition by providing better coverage at a better price.

I'm catching some heat from agents on this issue. I don't care. If you want the best coverage at the best price you need to bid your coverage. If you bid last year ask your agent to convince you why you shouldn't bid again.

Traditionally insurance programs are only put out to bid every three years. The insurance companies are taking advantage of accounts that don't go out to bid.

If you have not been out to bid in the past three years you will pay way too much for your insurance if you don't bid this year.

I insist on a fair bid process. I try to limit the competition to two agents - incumbent and one more. Sometimes I'll bring in a direct writer or a special industry program. Nobody gets any special treatment. I do not disclose premiums until the process is over. Incumbent agents should not get the last shot. Almost anyone can hit a stationary target in this market.

Clearly price is not the only issue in insurance. Quality of agent and insurer is important. Quality of coverage is vital. A bid process done correctly can do that.