3 Smarter Ways to Reduce Commercial Insurance Costs
3 Smarter Ways to Reduce Commercial Insurance Cost
1. Track your incidents as well as your claims
Many companies do not bother to track incidents, as they are situations where something goes wrong but no formal case is brought against them (i.e., they don’t spend any money on it). This mindset of “if the insurance company doesn’t need to be informed, why should we write it down?” needs to be broken.
Incidents are the number one predictor of claims.
For example, say you are a retailer and ten people slip in your entranceway, one of whom decides to sue you. If you only document the claim, you would be led to believe the slip was an isolated incident. However, by reporting all the incidents, it is easy to see that the entrance is a problem area.
Putting a preventative measure in place, even something as simple as a non-slip mat, can prevent the claim from reoccurring. This means that you won’t have to pay for costs and your insurer will have no reason to consider raising your premium.
2. Implement trend analysis across your organization
You may not realize it, but a large percentage of your claim costs may be coming from the same location, department, or group of employees. If you don’t pay attention to the root cause of your losses, you are likely spending money on repetitive claims that could be easily prevented.
Instead of accepting your claims as they are, take time to figure out what is causing them. Your insurance company will be pleased that you are taking such an active role in preventing losses, making them more likely to give you a better premium. You may also be able to reduce coverage in areas that rarely see incidents or claims.
3. Implement risk mitigation strategies wherever you can
There are probably tens if not hundreds of specific risks that you could consider as a part of your risk landscape. Obviously, you cannot hope to control all of them at once. Through trend analysis you can find the ones that are most frequent or costly to your organization and work on preventing those.
Mitigation techniques don’t have to be complicated: even assigning someone to monitor the risk and respond efficiently when something goes wrong is a risk management strategy. Finding cost-effective ways to protect yourself against various risks is a key step in reducing your insurance premium. Actively preventing losses will make insurers want your business, as they will feel that their costs for your claims will not be too high.
If you are a “good” risk taker, your premiums will certainly be lower than an organization that does nothing to manage their losses.
These actions may take a little effort at first, but the insurance savings are well worth it. You need to have coverage, but you shouldn’t have to spend a dollar more than necessary. The key is to tell your insurance provider about any risk management strategies you have implemented: they want to hear what you are doing to protect yourself, because it means you’re a better customer.
In-house risk control is the number one way to reduce insurance premiums – as long as the relevant parties know about it.
If you’d like to start saving money on your insurance premiums with the steps described above, our cloud-based Risk Management Information System can help you track all incidents, analyze and report on trends, determine and implement the best mitigation strategies for your unique organization, and much more.