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Writer's pictureSam Louwrens

When You Should (And Shouldn't) Quote

Dear construction companies, stop going to market every year.


I know, I know, it sounds like something a shifty insurance broker would say - but it really is in your best interest. Here's why:


Underwriters are extremely busy. They have limited capacity and limited time and are being flooded with dozens of new submissions every day.


If an underwriter has seen your same application every year for the last 10 years, they are going to put you last on their to-do list, and they are far less likely to give you favorable credits over time.


In short, it hurts your reputation in the marketplace. Spamming every carrier with an annual submission is a surefire way to annoy an underwriter that wants to work on "real" opportunities. They aren't just looking for submissions that have a clean loss history, they are looking for submissions that are likely to be bound.


If you choose to market every 3-5 years, on the other hand and specify that you want a long-term carrier partner, you are going to create demand around your name. You're more likely to get that 'top-of-stack' submission that catches an underwriter's eye and gets favorable pricing.


This doesn’t mean, however, that you should be on autopilot…


Marketing every 3-5 years opens you up to unique opportunities for negotiating with your incumbent.


3-4 months out from renewal, try this negotiation tactic:

“Hey, [carrier], we’re planning on not marketing our insurance this year! We need the renewal by [date], with [reasonable demand]. If you can’t fulfill this, then we will unfortunately have to go to market. Thanks!”


This of course won’t work for smaller businesses with a low insurance spend, but this kind of negotiation has allowed me to get my clients renewals early, add in coverages for free, and reduce premiums by as much as $25k in one year.


It is shockingly effective.


How you navigate the insurance marketplace is key to finding the best results - both in coverage and price.


Side note: after discussing with an underwriter, he wanted me to clarify that playing hardball with your renewal negotiations needs to be delicately handled and can't be executed every year. You will quickly lose your favor with underwriting if you are constantly putting the foot down - especially in a hard market.


If your agent is anticipating an increase with a carrier, you can use this negotiation to try and soften that blow, i.e. ask for a 5% increase rather than a 10% increase.


If you're looking for a better way to buy insurance, consider shooting me an email or giving me a call. I'll give you a peek behind the curtain of how insurance premiums are negotiated - and how they ought to be.

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