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We all know
the model. A friend, an alumni, a fraternity bother, or a neighbor offers
your company CEO to help with insurance. A start-up asks for insurance but
never tests the market as the start-up grows in size. We all have friends or
relationships that we trust. But do we verify that what might have been best
before might not be the best today?
Insurance costs are often some of the highest expenses in a company. Like
taxes, we often assume these expenses are a necessary evil and turn our
focus on running the business. However, some insurance, such as health
insurance, are the number one indirect expense concern among CEOs and CFOs.
Annual double digit cost increases are a major profit drain and can even
impact to the ability to do business.
We often assume all carriers and brokers offer similar pricing and services,
so our “friend” might as well get the business. In reality, this appearance
is based on a broker industry that is paid commissions on the sale. So, “why
should your broker want to lower your cost?” Why should competing brokers
want to lower your cost?
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Premium
increases are broker salary increases. Do you get a double digit salary
increase every year?
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Bill
management can lower premium rates. Does your broker explain how to review
the bills?
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Cost
management can lower premium rates. Does your broker explain how to
implement cost management best practices?
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Competition can lower premium rates. Does your broker create competition
among carriers? If so, how do they do so?
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Design
changes can lower premium rates. Does your broker proactively work with
you to design the optimum plan?
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Risk
management can lower premium rates. Does your broker analyze your data and
recommend best practices?
What do you
really get from your broker?
If you think about it, doing extra work takes the broker’s time and reduces
their income – not a good model. You might want to consider testing your
broker. Are you getting the best deal? Are you getting the best advice? Or,
is there an opportunity to create significant savings and improve internal
practices?
Our recommendation: Trust but Verify. Bring in a success fee based third
party who is compensated by saving you money. If no savings are found, that
increases your trust. If significant savings and process improvements are
found, then you have added measurable value to the company and you might
even be considered a hero!
For more information or questions about how to Trust but Verify, contact Jim
Villwock, IEM Group, at 678-485-1687.
Interested
in making more money?
Give us a call. There is no charge for asking!
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