If you have been purchasing your business insurance in the same manner for the last several years, you probably have been leaving money on the table and—more importantly—may be at risk of being uncovered or inadequately insured in the event of certain losses.  Ideally, business owners should buy their insurance in the most cost effective manner possible and be protected from most major, if not all, insurable exposures.  Few do. There is no reason why the risk management program and benefits available to Fortune 500 companies can’t be transferred to smaller, privately held businesses.  They have, although many business owners and their advisors may not be aware of the changing marketplace.   1)     Some service providers have jettisoned the commission concept.  Rates have gone up 25-50% over the past two years.  Your broker’s revenues are rising fast--without doing any additional work.  Go on a fee basis.  This will accomplish three things.   a.   Your umbrella premium will be lower since your automobile and general liability is lowered by excluding the commission on those two policies.  Umbrella premiums are a direct reflection of the premiums paid. b.   A fee will more accurately reflect the broker’s work and is generally less than your current broker’s commission. c.   Bid solicitations will now include direct writers and be more competitive   2)   There is no substitute for a clean, professional submission.  As with the large public companies, you should be asked for your input and your approval before a submission goes to the marketplace   3)   Ask about timelines.  Your fee-based broker should be willing to have his/her feet held to the fire by contractually agreeing how far in advance your submission will be sent out.   4)   Requesting the correct contractual terms from the carrier is particularly important.  Insurance companies would provide the least protection they could get away with.  Such items as Blanket Coverage, Agreed Amount, Replacement Cost and Stopgap are important to Fortune 500 Companies.  Smaller, privately-held businesses are entitled and due the same clarification and protection.   5)   Would your current broker provide you with a broker contract, outlining his/her responsibilities?  Most brokers show up when they get enough pressure from their clients or when it is convenient.  Ask if they would obligate themselves to provide:   a.      Annual checklist of insurance coverages b.      Annual policy summaries c.      Annual marketing summaries d.      Audit of your experience modifier e.      Timeline documentation.    6)  There are hundreds of classification codes on the general liability and workers’ compensation.  Get your broker to sit down with you and your representative and audit these codes to determine if there are better (less expensive) codes to use.   7)   Establish a relationship with your underwriter whenever possible.  Take them to lunch or invite them to a company event.  These are the people that not only make the decision on whether or not they should quote on your risk, but also how much credit you should receive.   8)  To an insurance company a reserve dollar is just like a dollar paid in a claim.  It is important that you audit not only your reserves, but also your experience modifier.  Statistics show that over 85% of experience mod worksheets contain some errors, either from data entry or incorrect information being given to NCCI by the insurance companies.  It is important to thoroughly check this information to ensure that you are receiving the credit you have earned.   9)  These are four major ways to handle a risk:   a.      Conventional Insurance b.      Cost Plus c.      Retrospective Rated Plans d.      Captives.   You need to understand the differences and explore all options.   10) The purpose of insurance is to protect you from catastrophic loss.  That is why every good business and every professional insurance plan has a strong Safety Plan and in the event the unforeseen happens, a Disaster Plan.  Do you?   Business success requires adaptability to changing times and practices.  We have outlined above some recent market innovations that may allow savvy business owners to get more for their insurance dollar while improving their risk management posture.                                        ____________________    John Bovard is an insurance executive with over three decades experience and strong interest in the property/casualty area. He is president of the Kansas City Division of the Sunflower Insurance Group. You may contact John at (913)529-1130 or jbovard@ins-inv.com. His website is www.sunflowerinsurance.com    <<Click here>> to download a printable copy of this article.