If it's a Mystery to Your Broker, it's a Mystery to Your Insurance Company
Posted by Andy Gregory on Mon, May 11, 2009 @ 09:59 AM
One of the main factors involved with underwriting a premium for a particular risk is the understanding of what the risk exposure is. This correlates directly to a chain of communication that starts with you as the risk manager, CFO, controller, or business owner. If you can't completely and accurately convey to your broker exactly what it is that your company does, then he or she is going to pass this incomplete picture along to an underwriter who will not have a clear understanding of your risk . If you are in construction, retail, or accounting firm, that's easy enough. But I can't tell you how often I come across business models that are so different and difficult to comprehend. Many times, I find myself annoying a new client because I ask so many questions in an attempt to completely understand their business.
If your business is an emerging technology, or a new product or service, you should be prepared to explain it to a ten year old. Many times, underwriters will decline to quote or quote higher premiums if they don't get the big picture. With a clear understanding of the risk, an underwriter will not only agree to quote, they will offer better pricing and/or terms and conditions.
After you explain it to your broker, ask him or her to explain it back to you to make sure that they get it. Then you will know that they can accurately pass that information on to an underwriter in order to get appropriate and competitively priced insurance.