I have recently taken on a corporate client who (among other issues) has not kept up to date with his insurance coverage. His broker is a family friend who basically rolls over prior year coverage without much due diligence. I need to update the coverage amounts for basically the entire suite of policies. I would welcome any suggestions as to benchmarks for coverage levels. Thank you.
Corporate Insurance
Answers
Randy, not sure of the size of your client, but the right insurance broker can be your best friend in helping you determine the exact policies your clients needs and shopping the policies for you. Brokers will often share benchmarking data.
Randy, you've asked a pretty loaded question. In order to make any suggestion whatsoever, this situation would require a detailed discovery conversation to identify current
Clients are often loyal to their brokers at their own peril...sounds to be the case here. You should advise your client to light a fire under the incumbent and force them to "go to market" to shop rates. If the broker is under-qualified, it's possible there could still be gaps in coverage and worse, unidentified risks.
I tell my clients that they need to shop (from different brokers) their insurance every year to two.
More and more I am leaning toward recommending Insurance consultants that will review independently both the policies and the company and recommend changes.
If your current broker is doing their job, then they can and will meet the recommendations in both coverage and price point. If not, then they loose the business and income stream.
Remember, every premium check you write, the broker is receiving a commission; and in my book that means they have a duty to service your account.
Wayne makes an essential point about the importance of an independent, impartial assessment of a company's risks and insurance coverage. In my experience with environmental risks, it is critical to conduct an exposure evaluation based on technical expertise integrated with a coverage evaluation based on insurance and financial experience.
Randy, your client's situation is not unusual. Over 90% of corporate environmental insurance policies we have reviewed contain critical exclusions or coverage gaps - and that is among the subset of companies that have purchased environmental coverage (through brokers, large and small). An independent evaluation may reveal that your client has not even considered key types of risks or insurance.
Randy,
You have an unenviable task. If you expose the unprofessional practices of the broker, you client either won't believe you, or the broker will convince him not to believe you.
That said, I agree that most corps, irrespective of size, get their insurance wrong. I've done a few renewals as a consultant and many as a seated
Randy, here's a suggestion: when I've encountered this situation, I've found that if the company obtains an independent risk evaluation performed by consultants to the company (not done by a broker), the company's incumbent broker will usually endorse the recommendations so long as he feels his position is not threatened (and there may not be an immediate need to change brokers if he can support and execute the necessary changes).
I strongly agree with Ray's point: companies don't know what they don't know, and unfortunately the current insurance brokerage system does not serve many companies very well (at least from my perspective with environmental risks). For example, we reviewed a major company's environmental insurance program after all the large brokers had worked on it, and still found over 50 material coverage gaps, one of which left a $90m loss mostly uninsured. There's a case study at: http://cleanfinancials.com entitled Coverage Evaluation.
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