Mitigating premium increases due to COVID-19

Welcome to Risky Business. Commercial insurance with Butler Byers. Paul Martin here, the business commentator on CKOM. And joining me is Colin Rooke the commercial risk reduction specialist with Butler Byers. And the guy who is the star of this show on a weekly basis so Colin welcome. And it is a little belated, but I’m going to say happy birthday to you too, but let’s get that out of the way. And I know you had lots [crosstalk].

Of people saluting you and sending you greetings. And so anyway, happy birthday from me as well.

Now today, we’ve talked a lot in the past about probably three themes that have, maybe four that have dominated what we’ve talked about for the last year. COVID being one of them of course, and another being cyber. The other big one you always referred to as the hard market, which is I guess it’s terminology you guys use, but it’s something that’s affecting businesses right across the country, across the world is that the insurance industry is having to replenish its treasury. And so that means higher premiums, lower coverage, yada, yada, all those stuff that goes with it.

I wonder today, if we could talk about trying to help people understand just what does that mean?

So I think it’d be helpful if we looked at a vertical, and said, here’s one industry, here’s how it’s affecting them. Here’s how they’re fighting back. So even if you’re not in this industry, it makes sense to listen to this because you’ll see, here are the steps you can do to mitigate what the big premium increases are coming. If that works for you, then we’ll just rock on that one.

Yeah, absolutely. And thanks again for the birthday wishes. I don’t feel as old as I am, but apparently 40 is my age, so I appreciate it. We have talked a lot about the hard market and I mean it’s not all doom and gloom. In fact, it really does give our clients… When everyone is under the microscope, it does allow the clients that are working on risk management, working the plan, trying to grow and mitigate risk. I mean, this is where this is where the work shows up, right? So we’re saying that depending on your industry, you’re going to see low end increases of 20 to 30%, high end 400%. I mean, that’s the average. So now we know, okay, so the average competitor of yours is going to see, let’s just say 40% increase overall. That’s what’s average.

So you think those that really aren’t doing well, there is no plan. High frequency and severity of losses. I mean they’re going to be outside. They’re going to be in the 80, 90 percentile. They’re going to be in those classes of business where they may not get renewal terms at all. If they do higher deductibles, reduced capacity, more subscribers. But then on the other side of the coin, now’s the time to say, okay well, if the benchmark is this, what happens to the good businesses that are putting in the work, that really do care, that want to be a better customer to the insurance market. Where do they end up?

And I mean, I can’t promise you decreases over last year, but if we can document and say 40% is the benchmark and you got away with five, I mean, that is the result of your work. That’s the result of working the plan. And it’s a result of all the effort. And it just shows that the insurance industry, the market, is listening.

However, you have to speak their language. What are they after? What do they want to hear? We’ve talked about our reporting process and telling the story correctly. But to take it a step further, we were always working on documents that we can provide to our clients that we’ve developed, you can fill out, you can make your own, you can circulate those, you can review them. And then when the time comes, when we’re at renewal we’re looking to potentially remarket, or in this case, I tell you, “Hey you know, we’ve got a call from the insurance company. They want to send loss control in.” Well, what if you said. “Absolutely, in fact, we’ve done an internal loss control document. I’ll make sure that’s updated, ready to go when he or she arrives. And I’d love to actually compare notes and show them what we’ve done, what we’ve caught and how we’ve addressed that before they have a chance to.”

And today that’s what I want to talk about. I guess an industry in particular that would be impacted by the hard market and then documents that we have developed today to help with that.

All right. You made an interesting comment just before we get into talking about that specific industry. I just want to circle back to that. You said that in a hard market, this is actually the opportunity for those doing the work to shine. And normally you wouldn’t go looking for difficult times, but I guess that’s the time when the real quality and value surfaces.

Yeah, absolutely. I mean if you say, okay the opposite of a hard market would be a soft market. Where everyone’s fighting to the bottom. So if you’re working on risk and I say, “Hey during a time where really everyone’s undercutting everyone else, I was able to reduce your premium by 20%.” You never really know if that was the work you did, that was just good timing. And then you can talk to your other competitors and, “did you get an increase this year?” “No, no. We saved a ton.” “You putting a lot of work in?” “No, not really.” “Geez you know, we saved a bit, we sure are putting in a ton of work.” So I mean, it’s more apparent when times are tough, right?

The bad risks are going to see higher deductibles. They’re going to have trouble finding coverage. They’re going to have trouble finding broad coverage. And they’re going to be faced with reduced capacity, which we talked about insurance markets saying “I’m just not prepared to risk my money on your company based on what I’m seeing.” So if we explain for any class of business what’s going on in their market and what they should expect, and then the result is something different because they put in the work. I mean, this is where we can really show there is value… In addition to sort of operational performance. There is real value, come renewal time, to putting in the effort.

All right. Well let’s take a look at an example. Let’s take an industry group and let’s look at how are they faring in this and how does the industry look at them right now? And it’s renewal time for them and what are the best in class doing to mitigate any increases.

You’ve been working on one I know, so let’s have a talk about that.

Yeah, absolutely. So I want to talk about the auto body industry kind of as a whole. And that’s everything from an auto body shop to sort of auto repair and everything in between.

Now, would they be the hardest hit? No. You know, somewhere in the middle. However, there is a lot going on. You’ve got big buildings with employees. You’ve got paint booths, potentially ventilation systems. You have… You’ve got dust and debris and spark creation, that sort of thing. You’ve got vehicles, whether you’re on the repair side, like auto repair or auto body. You’ve got vehicles that are in the care custody and control of the particular shop. And there’s a bunch of different lines of coverage that all come into play.

So it’s… You think, it seems like a fairly simple business model. However, from the insurance side, there still is a lot going on. And when you look at the industry they are one of those that rising frequency and severity of claims. And so therefore, certainly seeing the impacts of the hard market. There are fewer players that are even prepared to look at the class. And so if we’re reducing the number of insurers that are even prepared to look at this class of business, we’ve got to make sure that we’re putting our best foot forward, and that the best are getting, one, noted and also treated as such.

So what we’ve gone ahead and done is we’ve got, I guess, a series of documents and we’ve got more on the way, which, it looks like we got to take a break, so Ill probably

break. Because we’ll get you to start explaining this after we take just a couple of minutes. So we’ll be back right after this. You’re listening to Colin Rooke the commercial risk reduction specialist with Butler Byers. This is Risky Business back after this.

Welcome back to Risky Business Commercial Insurance with Butler Byers, Paul Martin here, and joining me Colin Rooke, the Commercial Risk Reduction Specialist with Butler Byers.

Colin, just before the break, you were kind of leading up to, or leaning towards some of these new publications that some new documentation that you guys have put together, which is designed to help those in the automotive auto repair, auto body business, and even if you’re not in those businesses, it’s still worth listening here because you can learn for your industry, similar examples, I’m thinking.

Yeah, absolutely. So I don’t want, you know, if you’re not in the auto body business or auto repair, I don’t want you to turn off the radio. You know, the point is, is we are developing documents consistently that are going to aid, you know, whatever industry you’re in, we usually have something and we’re always expanding that library. So if I don’t reference your class of business, not to say we don’t have it, but I want those that are listening to think along these lines.

So when it comes to autobody, you know, the auto industry in general, we’ve developed employee safety manuals for really all lines of business. That’s important because it’s not just about employee safety we cover, we cover what to do in a disaster, we cover sexual harassment, we cover return to work, we cover injured at work, it’s a very comprehensive, detailed package. Whereas, you know, if you don’t have anything in place now, it’s certainly a concern of the insurance industry that what’s going on there, are you open to litigation, is there going to be an employment practices lawsuit, are we going to hear about sexual harassment claims that sort of thing?

And so we’ve developed, again, the employee safety manual, which is very, very all encompassing, which you can review, make changes, make it your own, have everyone sign off on and implement basically right away. Now for anyone that’s listening and says, I’m a part of an association, I already have something or we’ve developed our own from scratch, this is a great document for you to just review, update, take what you like from this document, change it, that sort of thing. But again, it’s just showing that from an employment practices perspective, we are thinking about our clients, we are developing new documents and the auto industry is one of those.

The other document that we have that I’m particularly excited about is a loss control questionnaire. And we’ve talked about this in other industries before, and I just want to reiterate again, that depending on the industry you’re currently operating in like auto, every year or every few years, and certainly if you switch insurance companies, someone from their loss control department is going to stop by. Now, they are there to help, but they also are there to judge in a way, and they are certainly reporting back to the insurance company, what they find. So what we’ve done is said, okay, if we already know what they’re looking for, can we not develop a document that preemptively asks those questions of our clients? So then when the loss control inspector comes to your business, wouldn’t it be great for you to say, you know, I’m really glad you called, we have our own document, we’ve recently filled it out, I’d love to get it to you for your review and any tips you could offer. That would be fantastic.

Just imagine if that’s how that conversation went. And I’m not trying to imply again, that the loss control is a negative thing, but just imagine the conversation that’s going to be had at the insurance company level, once they leave your business and they see that you had your own questionnaire filled out prior, how excited that person is going to be writing up their report on what they found and the type of client they think you are.

Yeah, if you’re doing that kind of work on this, you must be doing good work in other areas too. So you’re probably a better looking prospect for somebody to insure.

You know, absolutely. And again, I’ve said on this show, the result of the loss control, it doesn’t result in, you know, you get a phone call from the broker. Look, they need to raise deductibles, they want off risk. I mean, in extreme cases, maybe, but at that point you’ve got the broker basically selling the wrong risk. So I don’t want to suggest that these are negative. However, if you talk, or if you’ve ever been through a renewal process, the underwriter has that loss control assessment. They see it, they’re very aware. And if you’ve done nothing to update the story, like you’ll get underwriters that will refer to a document that’s 10 years old.

You know, back 10 years ago, you had this and this and this problem, therefore I feel that this rate is warranted. And that’s the opinion if you don’t give them anything else to work with. So what if, even prior to a loss control inspector coming by, we just handed that in every year? Well, they did their own assessment, here it is, it’s filled out, here’s the notes, here’s what they found, here’s what they’ve addressed. And we add that to the renewal. You don’t have to be an underwriter to know it’s going to go a lot better with that information than without.

Do you typically see clients doing that?

Certainly not on their own. You know, I’ve personally never seen it on my own to say, you know, we’ve thought about this, we’ve prepared our own documentation and we would like you to have that and submit it on our behalf. You really almost never run into that.

So that’s why you built these step-by-step plans so that you can hand them to your clients and say, here, fill this out, and it will improve your chances of getting better coverage at a better rate.

Yeah, absolutely. And if you look at the documents that we have, I mean, they’re very, I mean, there’s a lot to them. And, now I’m not trying to say it’s a lengthy task. But, if I went to any client that we had and said, why don’t you prepare your own loss control document, and then get it back to me. I mean, it would take you months, and you’d probably still do it wrong. So the fact that we can say, well, this is the language they speak, this is what they’re looking for in your industry. All you have to do is basically say yes or no, with some comments, and you could rip through this thing in 30 minutes tops. And then we will have that document, we’ll submit it on your behalf and it’s going to help everybody involved. And certainly, I mean, ultimately the client. I mean, if you notice deficiencies in this document, it’s only going to serve you and the business to remedy that.

You know, it’s interesting, and you’ve got them for, I mean, we’re talking today about the automotive sector, but you’ve got them for virtually every kind of line of business that’s out there, don’t you?

Yeah, we’ve got dozens and dozens of documents, you know, loss control guides, safety manuals. I mean, you name it. Incident response plans, return to work. I mean, I just want to sort of pick one industry just to show very specifically what we have, and then what we’re developing to reference that, you know, depending on the class of business you’re in, we either are working on those documents or, or we already have them.

And just a reminder, these are available for free? Anybody can call you up and you’re quite willing to share these with them and whether they’re a client or no, and the whole idea is maybe someday they will be a client because they like being treated like this.

Absolutely. It’s all part of our risk reduction work that we do.

You’ve been listening to Colin Rooke, the Commercial Risk Reduction Specialist with Butler Byers, talking today about the hard insurance market and some ways that you as a business owner, or a business manager, can mitigate some of the potential increases that many in industry are seeing these days when it comes to renewing their commercial insurance policies.

Colin, as always, thank you. Appreciate it, and look forward to talking again next time.

I’m Paul Martin, thanks for joining us. And we’ll talk to you next time on Risky Business.