One of the biggest bills that the public sector faces is insurance, which is consequently a key area of focus for cost savings. This blog looks at 6 key ways of reducing your premiums which cost little or nothing. Often, a bit of leg work can save significant amounts on your stretched budget. The following 6 tricks can help you to significantly reduce your insurance premiums:
Past claims history plays a major role in your insurance premiums. The insurer will often consider an organisation that has had several small claims a greater risk than a business that has had one large claim, thus charge a higher premium.
The greater amount of risk you take on as an organisation, the smaller the risk to the insurer and so the premium goes down. Self-insuring (having a large excess on your insurance) is becoming an increasingly popular method of saving money in the public sector. The reduction in your premiums can more than offset the cost of the smaller claims.
A handful of bold councils self-insure 100% of their risk, managing all claims in house. 100% self-insuring is not for the faint hearted but can represent huge savings, even when taking into account the costs of staff and claims management systems required to do the task.
2. Haggle with your insurers
In a 2015 Which? study 78% of respondents successfully haggled with their insurers. This is not just the preserve of retail customers, commercial insurance can be negotiated down too.
To avoid rolling over on your insurance and paying higher premiums, you should start the ball rolling early.
Assemble your renewal bid specs 90 days before your renewal. Review you policy history and, as with any procurement, send the bid document to at least three insurers. Use the responses to negotiate with your existing insurer.
Use the same process if you use a broker, but request quotes ahead of any meeting and ask which underwriters they will be obtaining quotes from. Brokers need to be sure their quotes will not be given to other brokers. Giving you a quote early exposes them to lethal competition. Assure the brokers you will be completely fair. Then stick to your promise.
3. Understand your risk profile
By knowing exactly what your risk profile is you can make sure you are not over-insured. To evaluate your risk, review all the successful and unsuccessful claims, by type as well as value, that have been made over the year along with any near misses. This information can be used when negotiating with insurers so that they are insuring the correct amount of risk, rather than an educated guess with a bit of contingency added (not wanting to simplify the complex work of actuaries too much!).
4. Trend analysis
Reviewing your claims on a regular basis can help you address an emerging problem early on. For example, there may be a number of personal injury claims in a particular area. This could be narrowed down to a loose paving slab which can be easily fixed. Or a glut of motor claims linked to a new pothole in the road. Nipping issues in the bud early ensures that future claims, and thus premium rises, are avoided.
5. Use insured subcontractors
The nature of insurance is to calculate risk and understand the likely total value of claims. So, naturally insurance companies don’t like surprises. Some insurers require proof that the organisation they insuring only uses subcontractors who carry their own adequate insurance. This is because the organisation could be held liable for the subcontractors’ operations if they are uninsured, thus the insurer gets an unpleasant surprise when they have to pay out on a risk they are not collecting a premium on.
6. Utilise modern technology
All the above are great ways to reduce your insurance premium, but can be rather resource intensive. Fortunately you can buy software that can do many of these tasks in an extremely swift and efficient manner (see our last blog Bespoke or Off-the-shelf? for information about different types).
Claims management software can also speed up claims, reduce settlements and process FOI’s in hours rather than days/weeks to name but a few.
From an insurers perspective employing claims management software in your organisation demonstrates that you are committed to taking your claims management seriously. This commitment gives the insurer comfort that claims will be managed properly and so their risk exposure goes down.
If you’d like to know more about how a claims management system can help you, give us a call on 0333 010 7999 or email firstname.lastname@example.org.