It’s safe to say that until recently, insurance was something that the real estate industry didn’t spend much time thinking about. Landlords and builders just see it as the right thing to do. A box in the drop-down list. But insurance is now as high as number two or three on the list of expenses, and sound thinking is needed. Like a baseball pitcher, it determines the type of ball to hit.
Everything is in time
Our customers have said things like, “This is a deep cost. We need it. We know we need it. Banks need it. There’s no way around it. Give us a ballpark number.” So I’m speaking from experience here. And the biggest impact I believe anyone looking to manage their P&C insurance can make is to manage their time. Don’t leave it until the last minute to hire a broker.
Leaving it within two weeks of the renewal process is leaving it late. It doesn’t give your broker enough time to properly represent you, properly analyze the property/project and secure you the best service and pricing.
Ideally, if you have enough time, it is better to collect and analyze as much data as possible and give the whole story to the carriers of the property that is insured by the family or the company involved. It is worth considering that referrals to insurance companies are about 10 times what they were five or ten years ago. Carriers are full and, if you can send a detailed dossier, your insurance will go to the top of the list and will be written very quickly.
Not that eleventh hour requests Learning is always the fault of the customer. It is not unusual for some businesses to send a policy renewal reminder a few days in advance, when there is no other option or less money to be arranged.
The main feeling of the client at this point is that they are “chained” and they are looking for a word to escape. Brokers can share information they want to share with clients close to renewal, although it is not always in their best interest to give clients time to find alternatives.
Honestly, my advice would be to play hardball. Policyholders can go to their broker, or a competitor, to see what they want and how much it costs 120 days before they renew. This is without obligation or paying any fees. So get it fast, be consistent instead of hasty, and the results will be very good for you.
Well directed and delivered with nuance
Just as a professional baseball player has more than one tool (split, slider, or curveball for example), I cannot stress enough how important it is for businesses looking for help with their P&C to resist ‘one size fits all’. -fits-all’ method.
Some brokers may be lax in this regard. You may find that the longer your relationship with your broker, the less likely they will be able to research your property and portfolio.
For example, the conversation might go something like this: “’Are you in the northeast? Bomb. Here is the insurance boilerplate required. Thank you. It is a pleasure doing business with you. “
What you want to hear from your broker is: “I see this house in the northeast. Not every property in the area is in a flood zone including yours – so you won’t need $50 million in flood insurance.”
It is this type of speed that can have a real impact on lowering insurance premiums. In particular, whether you are the owner of an existing home or applying for a mortgage or a new loan, there are always loan requirements that your bank wants to meet. Just make sure you have the insurance to cover the eventualities so that the building remains functional and your finances are not affected.
Thinking outside the box
It’s time to choose. All bases are filled. And a common game is to see which of the hit insurance companies are willing to take your risk. But what if you could play differently for a change? What if you share it with them?
A new method is emerging called “alternative risk financing.” It’s designed for successful market players with large, well-managed portfolios that produce little per year.
Currently, the fees paid by these business owners are supporting the claims of the bad guys who have recently contributed to the increase in their crime rates and whose poor management is driving these fees even higher.
But some risk acquisition methods provide them with a way to participate in their own insurance risk. As long as they continue to pay less, they can turn their insurance into a profit center every year.
View insurance as an asset instead of just an expense? For many, some risk-taking strategies are like the seam-seam game that pitchers call to change the game to their advantage.
Patrick Yannotta is senior vice president of real estate at Varney Agency.
The views expressed here are those of the author.