Group Health Insurance Solutions

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I was called a super-hero today

Sophisticated or not errors are still made. Twenty five years in this evil and dull field and I still find intelligent businesses with incompetent help. The help is masked as professional, honest and usually classified as a friend. It never ceases to astonish me what we will tolerate but I assume it is the nature of the product. Insurance is misunderstood, boring and most businesses hate it. I completely understand that. I stay in it because someone needs to lend a breath of fresh air to the atmosphere. The other factor is because of the huge errors that agents make and consumers buy we make money, why leave something that works. Let me share with you the latest issue with a client.

Our client a manufacturer with about 80 employees wants us to assist them at reducing their costs – what we do every day – nothing new here. After gathering their policy information I notice that they own two buildings but they are insured for less than $200,000 each, yet they are each over 17,000 square feet, that my friends, is not enough insurance. It gets worse. This client has a clause in their policy called a “co-insurance clause”

Co-Insurance Explained
All commercial insurance policies are subject to a Co-Insurance clause (unless removed) which requires insurance subject to a certain percentage of the value of the item insured. If the insurance is placed to at least the percentage of value required there is no Co-Insurance penalty, however, if the amount of insurance is less than required a penalty will apply to all except the smallest of claims.
The operation of Co-Insurance is probably best illustrated by example:

Value of Building $100,000
Co-Insurance Percentage 80%
Required Minimum Insurance $80,000
Amount of Insurance Carried $60,000
Damage Caused by Fire $25,000
Amount Paid by Insurance 60,000
80,000 x 25,000 = $18,750

This example puts in dollar terms the Co-Insurance concept which could be described as
"DID insure over SHOULD insure times the LOSS".

This client’s policy not only had the co-insurance clause but had it at 100% which meant that they needed to insure the property at 100% to value. The $200,000 was not even 50% to value. The bottom line for this particular client is that they had NO COVERAGE if they had a loss using this factor. They did however pay for this every year. Yes, they paid every year to have NO COVERAGE. They probably had coverage called “the agents errors and omission insurance” but they would need to sue the agent “friend” for that coverage to take effect. Why did this client under insure? They had to have known that it was not enough coverage. They did have a responsibility to read their policy, right?

The client knew they under insured the property; they were trying to cut costs and felt that they could live with the amount of coverage they selected. What they did not know is how this penalty would affect them. Imagine having a claim and finding out you had been paying for this coverage, you thought you had, and OOPS….no coverage. Guess what? The insurance company will not return your premium for this coverage you didn’t really have either. Nice, isn’t it?

Let me now tell you how easy this was to fix. We come in, we find a carrier to give the client $3,000,000 million dollars worth of coverage on the buildings, eliminate the co-insurance clause all together and ……the BEST part, save the client 40% off their premiums. We gave the client coverage they never had and still saved them money – does it get any sweeter than that? Well, yes and no – our client decided that they still love their agent so …they wanted to stay with them which is part of our deal, because you can have anything you want with us. We cleaned up their existing policy and our client stayed with their same agent for 40% less, more coverage (or should we say, coverage). Personally, our recommendation was to leave the agent – he did a horrible job for this client – but in our business – our clients make the calls we just help you run a business powerfully…you’re the boss. Do you have a co-insurance clause in your policy? Do you need a super-hero? Sphere: Related Content

Is anybody awake?

A new year, a new avenue. We are launching in less than 30 days a new name, new website and some unique new tools, I’m very excited and you should be too. Yes, yes, insurance is not that exciting but given the times I think we should all get a little more excited when we see ways to decrease our costs.

We have been reducing business cost now for twelve years but we still run into the problem of prospective clients not believing in what we do. I think it could be compared to a guy carrying a laptop computer to a business in the1960’s and telling the business all that it could do for his business, and then asking would you like to buy one for only $700. The business owner would throw him out on his ear and think he was crazy. Telling the guy we have the mail to deliver information. Now, I know that sounds quite crazy knowing what we now know, but we get the same response at times. We get comments like “our insurance agent shops our insurance for us every year –they’re an independent agent you know”. Yes, they are and they still are paid a percentage of what you pay so when your premiums go up they get a raise, which sounds unbiased to me. We get comments like “our agent tells us this is the best deal”. Of course they do, why he would tell you I’m ripping you off by 40% because I care so much about you. But here is the worst part, I have this client in San Diego 300 employees, nice company – I worked up some preliminary numbers the savings was 50% they have a premium of $520,0000 a year and we got it down to $258,000 it was so scary that they passed on it. I looked like a deer in the headlights because I’m so confused as to why ANY company in this environment would want to take a pass on a savings so large. The obvious, they think it is from Mars not Earth. It is, you know. It is just not reasonable that we could save a company of that size, that much money. It is unfathomable that an insurance agent or carrier would charge that much over the market price. I would think the fact that I can get that same premium with their current insurance agent and carrier would help ease the fear, but no they want to leave it alone. I’m serious, this happened this year. Business owners – WAKE UP, your missing opportunities because your in fear of what you don’t know – there are great tools coming down the path and you need to check them out before you dismiss them. A few come to mind – www.brightscope.com ranks your 401K plans, www.billshrink.com shows you how to get the best deal on cell phones and credit cards, www.truecar.com tells you the high and low price of a new car. All around you are money saving companies or ways to find out how your programs are working. You don’t have the time for any of this, but I can assure you if you don’t make the time you will be in far worse shape down the road. A company in Los Angeles last month with 150 employees just saved $230,000 on his workers’ compensation, it’s true and if you want to have a powerful, successful company you need to pay attention and find out where you can minimize your costs while your sales staff focuses on increasing your sales. Keep an eye out for new opportunities, our new name and site will be www.RateCraft.com watch for it - it's going to make a huge difference.

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Always amazed

Truly I live a more exciting life than just insurance - no - really, really I do. But you will just have to get to know me to find out what those other things are - this site and this blog is....all things business..all things insurance. As you can see - I just have hundreds of viewers.

Best deal of the day -

This is our record so far - we just closed a deal saving our client a record 75% off their insurance premium on workers' compensation. The client went from just a touch over $25,000 in premium to $6,800. Incredibility, legitimate and accurate. We do this every year for some lucky company - but our largest has been about 72%. I just thought I would share some of these results with the world. It all comes down to putting power back to business owners - and I LOVE that! Sphere: Related Content

Secrets Your Agent Doesn't Want You To Know About

Your agent doesn’t work for you.

So, your agent says they give you the best deal. They’re very responsive when you have a claim or question. Isn’t that working for you? Is it?

How does it really work? When the agent gets paid a percentage of what you pay – how can they really be looking after your best interest? If you pay less don’t they then make less? How much do they make?

Let’s take a look at these issues. An agent make approximately 10%-15% on workers’ compensation and 15%-20% on property and general liability policies – some cut special deals with the insurance carriers for higher commission rates. Some are as high as 30%. This is a percentage of the total premium. In addition to this, the agency gets an additional contingent amount of money if the agency writes a certain volume of profitable business with an insurance company. So in fact, there is an incentive to write business with some insurance carriers over others – how much commission up front, how much back in profit sharing.

When you receive your insurance proposal does it list the commission on the premium page? Does it tell you what the agency will get if they write business with that carrier? Most agents do not give you the commission amount and agents never say what the contingent profit sharing plan is with each of their carriers. Does your agent work for you? No, they operate a business just like you and it is for PROFIT, but their profit is your loss unless you are savvy enough to know how to navigate the waters.

Insurance agents and insurance carriers should make a profit. However, it seems that their profit at times is a bit large. Consider that as a consultant we average a savings of 35% on 98% of the accounts we work with in our company. Consider that every year we find a client where we save them 50% or more. How can that happen? Are the business owners asleep at the wheel of their own business? No, it is the system that sets it up this way. It is a product that most do not fully understand and until recently the system only had the “insurance experts” of insurance agents to help business owners out with this process. They are “the system”. The best avenue is to look beyond “the system” and that is with independence. You can hire a full time insurance specialist or you can hire a consultant paid directly by you – the client. Who do they work for, one person, you.

The best part of this is some consultants – like our company – believe so strongly in what we do – that we offer to our clients a win/win. We are only paid if we save you money without jeopardizing your coverage or quality of carrier in any way. See our website for more information about how we work and check back from more tips…they get better. You don't even have to change agents to win over "the system". www.pracentral.com

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