Beyond the Bargain

Can your insurance provider offer anything beyond a cheap premium?

Building strong professional relationships is the key to good business. The importance of this becomes clear when you seek to purchase a business insurance policy amid the ups and downs of the insurance market.

Many forces affect the price and availability of insurance coverage for businesses: competition among insurance carriers, current interest rates, the stock market, regulatory activity, natural disasters, growth in litigation and rising medical costs. Accordingly, the insurance market should be considered cyclical. Prices rise in a “hard” market and fall when market conditions are “soft.” A soft market may be considered a “buyer's market,” with more favorable pricing that may tempt insurance buyers to search for bargain prices. But, a firm should be careful to anticipate the potential consequences of such bargain hunting. Cheap policies may not seem like such a deal once the market begins to harden again.

Given shifting market conditions, how can waste firms, their insurance brokers and insurance carriers best prepare themselves for changes in the market that can influence insurance availability and price?

While previous insurance markets have shown dramatic fluctuations, industry experts say they expect less severe swings. For the most part, buyers today are dealing with stable, responsible insurance companies with plenty of capital. Today's insurers are much more cautious in their underwriting practices. Because of this, they will not be rewarded by past questionable market share growth activities.

In previous soft markets, some carriers cut prices to increase volume, but the current market will likely see a lot less of that. Industry analysts, clients, investors and other stakeholders are looking for responsibility in the market.

No matter the current condition of the insurance market, it can be advantageous — especially in the long run — for waste firms to build stable relationships with carriers that demonstrate discipline. The value of insurance is not based on price alone. Waste firms should select carriers based on a level of service that they would offer their own clients.

Waste companies should understand the value that an insurance carrier brings as a trusted risk management advisor, not just a vendor. Advice on service contract agreements, tips on loss prevention strategies and guidelines for driver safety training are just a few of the services that insurance carriers are offering to broaden relationships with their clients. Your carrier should show concern for your overall risk management needs, rather than simply providing the lowest price premium today. They should be willing to help you prepare for tomorrow's risk management challenges, too.