Simple and Innovative Ways to Control your TCOR (Total Cost of Risk)

Many finance people have trouble figuring out what their Total Cost of Risk is - let alone how to control or reduce it.

Often, your current insurance broker may not have the means nor even understand the means to control and reduce TCOR.

The following are a few simple areas where a broker can in partnership with the finance team effect the TCOR and thus Growth, Cost Containment, Asset Protection and utlimately Business Continuity.

* Coverage and policy audits: To limit the company's exposure to un-covered claims, know what you are covered for and better, what many coverage enhancements are available.

* Benchmarking and CAT Modeling: To ensure that the company is not overinsured OR underinsured - and thus exposed to unpaid claims.

* Claims reviews: Monitoring reserves, safety and back to work initiatives, fraud awareness can go a long way in mitigating loss ratios and thus experience mods.....

* Experience Mod Audits: 90% of mod audits result in return premiums to companies. Don't let the NCCI or other agencies penalize you unjustifiably.

* Classification Reviews: A good broker will dictate to the carrier how his client should be rated - and thus charged. Don't leave it up to the insurance carrier.

* Loss forecasting: A good broker advocate with the right tools, can 'paint' a better loss picture - no matter how detrimental - to the carrier. Again pre-empting the carriers attempts to profit unneccessarily at your expense.

They NEVER Told Me I Needed THAT Coverage!!

5 Coverage’s you never knew you needed – or knew were available:

1.       Product Recall - Withdrawal........Provides expense reimbursement coverage including both rebranding and, if necessary, disposal.

2.       Cyber-liability.......The most volatile exposure out there. Think Citi, Sony and more!

3.       Crisis Insurance.......Reputation recovery; Again a reaction to the world of social network defamation and allegation.

4.       Stock Throughput......All in one coverage for distributors and manufacturers.

5.       Trade Credit.....Insures accounts receivables and enhamces a company's ability to profit and grow!

The Top 5 Reasons why I HIRED my Insurance Broker – Poll Results are IN!

Following up to my recent and very popular post on the 5 Reasons why I FIRED my Insurance Broker….

1.       Understood my business and its unique exposures – has many similar clients in my industry.

2.       Promoted a specialized program which addresses my cost and coverage needs.

3.       Provided innovative ideas and solutions – which my current broker did not – which focus on my priorities as an economic buyer. Illustrated how his/her Risk Management services and solutions could improve my risk profile.

4.       Developed relationship over time and became a trusted business advisor.

5.       Price, price, price!

5 reasons why I fired my Insurance broker – Poll Results are in!

1.       Service  issues......Timeliness and attention to detail are key!

2.       Didn’t understand my business and wasn’t pro-active in providing guidance.......I have to wear many hats; Need  a broker who can see whats down the road for my company.

3.       Didn’t comprehend my priorities.......Cost containment; Asset porotection; Contractual obligations!

4.       Other brokers asked and provided solutions  to my problems.......Under my priorities and in terms understand, show me how your products or services can help me!

5.       I felt I wasn’t valued enough – that I was a small fish........It would be nice to get a call more then once a year from my broker.

5 Keys to reducing Workers Comp Premium Costs

1.       Loss forecasting

Most insureds don't understand that they (with their broker) can control the renewal negotiation process. Loss forecasting - if to the advantage of the insured - can force a carrier to reassess his loss cost factors, loss pick and ultimately premium. In short, if I can show the carrier that my clients claims are not trending as badly as first thought, I can drive down premium.

2.       Experience Mod reviews

A no brainer, annual Experience modification reviews are successful 60% of the time in providing an adjustment and thus return premiums.

3.       Classification reviews

Are your employees classified correctly. Especially in the manufacturing industry, mis-classification can be the difference in tens of thousands of premium. Why should a clerical employee who happens to have to walk across the shop floor to get to her bosses office be classified as a shop floor employee?

4.       Quarterly Claims reviews

Your broker should be conducting quarterly or bi-annual claims reviews to analyze reserves, lag time, reporting prodedure, back to work process and potential fraud.

5.       Marketing

Many companies believe that they are 'stuck' with the State Funds due to their risk profile or because of cost. Standard carriers more and more are competing with the State Funds price wise and providing top notch service, claims handling and coverages.

What do you consider to be your Company’s greatest insurance exposure?

Cost containment, Asset Protection, Business Continuity and GROWTH!

These are the answers CFO's provided in a recent Linkedin survey with over 600 responses.

A simple insuranve program review can show where holes in a program can be that can lead to uncovered claims, inadequate limits or incorrect classification codes.

All can cost a company thousands - even millions - and make the difference between layoffs and profit and hiring!

Want to Grow your business in 2011? Trade Credit insurance offers business security!

Trade credit insurance is a business insurance product that indemnifies a seller against losses from non-payment of a commercial trade debt. With trade credit insurance in place, the seller/policyholder can be certain that non-disputed accounts receivable will be paid by either the debtor or the credit insurer.

Trade credit insurance is a financial tool to hedge against both commercial and political risks that are beyond a company's control. Balance sheet strength is ensured, cash flows are protected, and loan servicing and repayments are enhanced.

A trade credit insurance policy also allows companies to feel secure in extending more credit to current customers, or to pursue new, larger customers that would have otherwise seemed too risky.

The protection it provides allows a company to increase sales to grow their business. Insured companies can sell on open account terms which, for exporters especially, can be a major competitive advantage.

Companies invest in trade credit insurance for a variety of reasons – including:

• Sales expansion: If receivables are insured, a company can safely sell more to existing customers OR go after new customers that may have been too risky without insurance.
• Expansion into new international markets
• Better financing terms – In many cases, a bank will lend more capital against insured receivables, and may also reduce the cost of funds.
• Reduce bad-debt reserves – This frees up cash for the company. Also, trade credit insurance premiums are tax deductible, but bad debt reserves are not.
• Indemnification from customer non-payment.

A wholesaler company’s credit department had granted a credit line of $100,000 to a customer. They then purchased a trade credit insurance policy and the insured approved a limit of $150,000 on that same customer.

With a 15% margin and an average DSO of 45 days, the wholesaler was able to increase their sales to realize an incremental annual gross profit of $60,000 on just that one account.