Prepare Yourself As A Business To Buy Insurance

Get yourself organized. In this episode of Risky Business, Colin Rooke talks about the information your team needs to put together prior to purchasing insurance.

Listen to the full episode here, or read the full transcript below

Paul Martin: Welcome to Risky Business, commercial insurance with Butler Buyers. I’m Paul Martin Business Commentator here on CKOM. And you’ve heard me talking about it, the Butler Buyers Risk Assessment System. So we continue our conversation with that, speaking today with Colin Rooke the Commercial Risk Reduction Specialist with Butler Buyers Commercial Insurance. And he’s the guy who helps us navigate through this sometimes I think murky world of insurance. It’s like anything else, the more you know about it, the more you know about it. And Colin, that’s really the point of our program and our conversation, is you try to help people with your step-by-step assessment to walk through not just the buying of insurance, but how to prepare yourself as a business to be ready to buy insurance. Is that a fair description?

Colin Rooke: Yeah exactly. And you know, you made an interesting point you know, the moreactually we know about risk, the scarier risk gets, right? And I mean it’s our job as the broker and the risk experts to you know, work with our clients and make sure they’re properly educated in all things risk. So you’re right, you know, it’s not just about the purchase and placement of insurance, it’s really about telling that story. It’s about you know, gaging levels of risk tolerance, working out a system and a plan and putting that plan in place. And then looking back over the year or three year span and say so you know, working together on risk as in sort of the broker client relationship, we were able to lower you know, this is where we were before and we were able to lower the risk profile overall to a lower level. Which ultimately we use to negotiate the insurance on that.

It’s really about telling that story. It’s about gaging levels of risk tolerance, working out a system and a plan and putting that plan in place.

Paul Martin: Effectively a business owner has to get ready to buy insurance. It’s not just one size fits all. Doesn’t come off the shelf. Every program is custom made. And so the more information you have as the broker, the person who’s cobbling together the story that will be taken to the insurance industry, to the insurance companies and say, “Here I have a client. Here’s their story.” The more you have information and the company’s prepared, the better the job you can do, and ultimately the better the coverage premium, the full package the customer or the client will get.

Colin Rooke: Yeah you know, when you go to the insurance market and you know, an underwriter receives an application, you’re given a classification code. And really that code puts you in a box. They say, “Okay okay I see what we’re doing here.” They assign a number, and they group you with every other company, or every other similar business and say, “We got it. We know what you do.” And I haven’t met a business owner yet that says, “Exactly. There’s no difference between myself and all my competitors. We are doing the same thing every day. We have the same people, same skillset. We are as the same as we could possibly be.” Never happens. Probably never will happen. And so that’s the problem. If you’re not armed with more information, and we talk all the time about we need to know where the company has been, where they are now, and where they’re going. And we put a plan together to get there.

But if we don’t have that information you are going to be in that box. You’re going to be grouped together with all the similar businesses. You know, whether you’re you know, if you’re a plastic manufacturer, they’re going to grade you and assume you’re doing things or not doing things that absolutely every single plastic manufacturer does.

And again, we all know that that’s not the case. Every single business is different. But we need to know that. And I would challenge anyone that’s you know, right now working with a company that isn’t gathering that information to say well you know, if you’re going to accurately portray our company to an insurance market, to the market, you know, shouldn’t you have that story? Shouldn’t you basically know this company inside and out? And you know, we take that approach. We agree that that’s exactly our role. That’s exactly our job. You know, if you hire us to represent you know, company A, we’re not doing our job if we don’t have the whole entire story.

Paul Martin: So there’s a lot of research involved here, if I’m hearing you correctly. And I’m curious as to how you go about doing that research so you differentiate my company from my competitor’s company. Is that what your step-by-step plan’s about?

Colin Rooke: Yeah it’s you know, we start with you know, we have global risk topics that we feel we need to address with virtually any company we’re dealing with. But further to that, and the bulk of our time is spent learning about new and emerging risk. Or looking at existing risks and how they have changed. And we also take it a step further. So there might be a risk that’s changed over the course of the last year or six months. But we also need to know okay how is that affecting this particular industry where our current client you know, where they operate.

There might be a risk that’s changed over the course of the last year or six months. But we also need to know okay how is that affecting this particular industry where our current client you know, where they operate.

So it’s a great deal of research. And you know, it takes a lot of our time and we have a team approach. So we have people looking into risk all the time. And you know, we have trouble keeping up. And that’s why the work has become so important. Well if we’re dedicating a large portion of our time to learning about risk, and our clients are busy running their business you know, we know that they’re not putting in that dedication. And they don’t have time to. And we don’t expect them to.

Which is why our assessment’s designed to understand okay what do they know about, what do they not know about? What do they need to know about? And everything in between. And you know, how can we formulate a plan to say this is impacting the organization in a big way? We’ve identified the cost of doing nothing. So working together, here’s what we’re going to do. And this is what the impact’s going to be on the company.

You know, maybe we can mitigate some claims. Maybe we can transfer that risk altogether. Maybe we can avoid it altogether. But and a big part of our work is also again identifying what level of risk is the company assuming. And what is the cost of risk assumption, and making sure that our clients are okay with that.

Paul Martin: Now gathering research and data is one thing. And I think you’ve kind of alluded to this here, that so now I’ve got a bunch of facts about the prospective customer. Or prospective client. And before you take that information to market, you then digest all of that stuff and say, “You know what? In category 7.2 we could actually, if you could just tweak this in the way you run your business, it could save you big money.” I mean you actually identify opportunities for a improving the business but at the same time, making the business more attractive to an insurance company.

Colin Rooke: Exactly. So you know, for example we talk about the cost of employee turnover. You know, we often find that the company isn’t truly aware of the hard cost of letting an employee go. So we talk about all the external factors of you know, maybe there’s some overtime involved. The time on you know, the HR. There’s the training, there’s any investment into advertising for that position. And the list goes on.

So if we’re able to discuss with our clients the cost of turnover, there’s two parts to that. So we say, “Okay so we know the cost of turnover, we know there’s turnover’s been an issue. We are going to work together to clean that up. And we’ve identified that if we could reduce it, we can save the company x amount of money.”

But again, by working on our people we can go to the insurance market and say, “Look, the liability premiums are such. And if we had happier more engaged longer tenured employees, that aren’t turning over like thy were, you know, we can reduce the risk of error. We can reduce all the misses you know, in the organization.” And so again we’re going to use that information to say we believe our clients warranted reducing, paying reduced premiums.

Paul Martin: So there is an element here to … that does involve insurance I guess in terms of lowering premium cost, and reducing the risk that an insurance company would say I have to assume when I write this policy. But there’s also just the pure management piece of this thing. You’re helping people be better managers of their businesses.

Colin Rooke: You know, and that’s true as well. In an ideal situation, we would look to management to even reach out to us as things come up. You know, if there’s a new situation or maybe a new risk that management’s made aware of you know, let’s have that talk. Let’s work on it together. That’s our job. But we like to say you know, we make management’s life easier by providing and really identifying areas where they can work on improving.

We do a lot of benchmarking with our clients. So here’s what we’re seeing you know, in your industry. And here’s where you fall in that category. And you know, often there’s a lot of eyes that open. And we say but we can improve this. And if we do, you know, first of all the company will be more profitable. But we can also reduce your overall risk profile by addressing it and sharing that information.

Paul Martin: I want to come back to this topic of benchmarking. But we’ve got to take a little break. So if you’ll just stand by for a second, we’ll be right back. You’re listening to Colin Rooke. He’s the Commercial Risk Reduction Specialist with Butler Buyers Commercial Insurance. You’re listening to Risky Business, commercial insurance with Butler Buyers. We’ll be back after this.

Paul Martin: Welcome back to Risky Business. This is Paul Martin. I’m speaking with Colin Rooke, the commercial risk reduction specialist with Butler Byers Commercial Insurance. Just before the break, Colin, you used the word benchmarking. I wanna dig into that a little bit. You say, “We do benchmarking.” Perhaps you could just explain a little bit about that and what your universe of companies that you use to create the benchmarks looks like.

Colin Rooke: Yeah. It’s important for us to be able to identify what the norm is in the industry that our clients operate in. We spend a lot of time saying, again, “This is what we’re seeing on all different levels. This is the regular level of preparedness when it comes to cyber security. This is the average level of turnover. This is the average …” We spend a lot of time talking about averages, talking about best practice, and talking about where most companies fall.

We want to work … I guess what I mean is, we want our companies to be as good as they can be. So when we talk about benchmarking and we say, “Most are doing this,” again, that’s just getting our clients to average. We want our clients to get to great. So we say, “Here’s sort of the bare minimum,” and we’ll let, again, our clients know if they fall above or below. But again, back to when we’re  going to the insurance market, we wanna sell best in class, and we use that term all the time. By identifying where the industry is and working together, or just proving that our clients are far in excess of that, allows us to negotiate more favorable terms for our clients. It also gives us a clear indication of either the work that we need to do to get them up to par, or in a lot of cases when we find a certain area where the company is sort of leading their class, we’ll work on that as well. Because if it’s something that is very  important to our clients, then we’ll work on that to make sure they maintain that.

For example, workplace safety. If the average in a certain area of manufacturing would be 120 days without injury and we meet a client that’s at 500 days without industry, they don’t wanna give that up. So we continue working on safety, for example.

Paul Martin: I would think that if I were the manager of a business, I’d wanna know where I stand anyway. This is, if I can put it this way, non-insurance information that you’re bringing to the table and you’re giving me. 

Colin Rooke: Yeah. It’s risk information. Some of our conversations lead to levels of risk tolerant and topics like self-retention, but it’s from these conversations that we’re able to determine or to ascertain what our clients’ true comfort levels are. If we talk about … This will be an insurance topic, I guess, but we’ll say, “The average liability limit is such,” or “The average deductible is such.” That’s our way of throwing it out there and saying, “Mr. Client, what are your thoughts when you hear that number?” 

Some of our conversations lead to levels of risk tolerant and topics like self-retention, but it’s from these conversations that we’re able to determine or to ascertain what our clients’ true comfort levels are.

“Well, geez. If the average deductible is 10,000, we would never put in a claim for anything close to that.” And we’ll encourage our client to keep explaining. Maybe they have a couple of examples of when there’s been a potential claim and they’ve self-insured. I love hearing those stories, ’cause it’s one thing to say, “We would not put in a claim for such-and-such.” It’s another to say, “We’ve done it. Yeah, things have happened, but we chose not to.” Then that opens the door to, “If you’re at a $10,000 deductible, what about a $50,000 deductible?” If we go to the market with that, there’s a lot more we can do and there’s a lot more negotiating power that we have. Plus if your comfort level is such on the liability side, now let’s start talking property. Again, the whole goal of that is to determine what their true risk tolerance is. That’s why we have those conversations.

Paul Martin: One of the things we haven’t really talked about … We’ve done a lot of information exchange, you and I, in the course of running this program. But if I’m a business owner and I’m listening to this for the first time today and I want more information from you, what do I need to do? How do I get ahold of you? What steps are you gonna take me through? Do I just phone you? I guess I’m looking for a contact process here. How do people approach you, prospective clients?

Colin Rooke: Yeah, call the office. You can ask for me, Colin Rook, and we’ll make sure that … We’ll put you in touch with the right person. I do the bulk of these risk reduction workshops, and if I’m not giving the risk reduction workshop, I’m definitely involved in the preparation and development of the workshop.

But from there, what we’ll do … It’s because our process is so different … We often have sort of a pre-meeting. Let’s say in an ideal situation, I’m approached by a client at an event, or someone does phone-in, what have you. I’ll say, “Look. Our approach is really different, so let’s get everyone you think would be involved in this decision, and let’s have just a quick meeting. I’m gonna explain how different our process is.” From there, you’ll know who needs to be in the next step meeting.

You’ll have a really clear indication. ‘Cause we’ll talk about how it works, the areas that we cover. But I find we spend so much time explaining the process because it’s so different, it’s so … It’s really eye-opening. I often just ask, “Okay, let’s just get the right people in the room right away.”Because I find if … Let’s say I meet up with the CFO, for example. I’ll explain it. The CFO will buy in. They’ll say, “Sounds great. This is what we need. Let’s move to the next step.” Then they’ll broaden the group. The first 30 minutes of our next step, which really is the assessment, is always spent explaining what the heck we’re doing here. So we sort of back it up and say, “Let’s explain what the heck we’re doing here to everyone. Then we’ll get agreement. Then we’ll move to the next step, which is the assessment.”

Once the risk assessment’s done, we’ll come back with a plan. We’ll say, “Look. Should you elect us to be your broker, we’ve identified the following. We’ve put that into a plan. Here’s how we plan on implementing that plan. Here’s the work we’ll do. Here’s what working with Butler Byers will look like.” It’s rarely about the insurance coverages itself. We want you to hire the best broker that has the best plan, and then allow us to go to the best markets. That’s really our process.

Paul Martin: We’ve just got a moment left here, but typically how long would the assessment take? Am I talking weeks and weeks, or am I talking hours here?

Colin Rooke: Yeah, the assessment itself, the meeting of the minds … About an hour, hour and a half. It usually goes that extra half hour if we’re having really good conversation. We’re trained to sort of ask the question, get the answer, move on. Because it truly is an assessment. We’re just gauging, “Okay, what conversations are we gonna need to have after?” There is a lot to cover. We’ve talked about it. There’s usually about 45ish questions. If we’re gonna get through all those, we kinda have to move at a good clip. But you’ll find it is very thorough, and it’s always enough to sort of keep moving on.

Paul Martin: Could be the best one hour a business owner spends.

Colin Rooke: Whether we ultimately work together in the end, you’ll learn a ton about risk, you’ll learn a ton about your company, and you’ll definitely have conversations that you’re not used to having.

Paul Martin: There’s nothing wrong with that.

Colin Rooke: Yeah, that’s true. We don’t charge for it, so might as well try it out.

Paul Martin: Oh, Colin, thank you very much for doing this. My guest has been, as always, Colin Rooke, the commercial risk reduction specialist with Butler Byers Commercial Insurance. You’ve been listening to Risky Business, Commercial Insurance with Butler Byers. This is Paul Martin. We’ll talk to you next time.