A key objective for an insurance manager is to source and secure competitive and appropriate insurance cover for their organisation. Budget cuts are rife with many companies looking to streamline their costs, so read on for some top tips on how you can save money on your insurance premium.
- Know your assets
An up to date asset register will ensure that insurance is only in place for current assets rather than for vehicles, buildings, or equipment that should have been removed. Owner or leased assets tend to change over time and perhaps also change in value too, having an up to date asset register will ensure that appropriate level of cover is applied. Does your business still own the vehicles and equipment listed? Has your company purchased items that are not listed?
A small point, but it can be worth checking the insurance cover for any vehicles owned by an organisation as it is generally not cost effective for older vehicles to be insured for physical damage. You should also review the driver register, a reduction in the number required or removing problem drivers that you no longer employ may also reduce your premium.
Completing risk assessments of your buildings and updating the occupancy of these buildings will also help reduce your insurance premium.
- Clear claim history
Claim history is of great importance. It will enable you to negotiate with insurance providers based on historical claim history and trends. Having numerous years’ worth of claim data allows you to potentially demonstrate a reduction in claim volumes over time and to also show how the introduction of risk management have also assisted this reduction. It may also be possible to reduce the premium for employers or public liability claims for example, based on receiving lower claims than expected when the insurance was initially sourced.
Demonstrating accurate reserving and settling below the reserve will also help to save costs. If you can demonstrate an increased repudiation rate, this will also help to save you money on your insurance premium.
- Risk management to reduce claim volumes
Following on from claim history, if you can spot certain trends of claims you can put measures in place to mitigate the risk of the claim happening again. For example, if you spot that you are receiving several motor claims it may be beneficial to send drivers on an additional driving course to reduce the claim volumes from this cause. If you can reduce your overall claim volumes, then your insurance premium should reduce too.
Preventing fraudulent claims will also help reduce claim volumes. Using a claims management system will allow for fraud checks to occur, searching to see if an individual has claimed previously for example.
Hiring a claims inspector will deter people from making fraudulent claims or from exaggerating claims. Having someone dedicated to investigating claims will help you reduce claim volumes and the claim costs should also reduce. Adding a salaried individual may have huge cost savings in terms of your insurance premiums.
- Increase your deductibles
Small claims can be expensive to process. It is therefore in the interests of both the insurer and the business to have the right level of deductible. With a higher deductible, only a certain level of claim will be worth making by the business. However, the insurance premium will be reduced allowing for this cost saving to be used and invested in the business to improve its risk management which will hopefully reduce claim volumes. This is a type of self-insurance and weighing up how much the smaller claims may cost you versus the premium saving is a good way to determine if saving money on your insurance premium in this way is of value.
Using triangulation and fund modelling, analysis of claim costs by range and historical RPI inflations can be undertaken. With this data, forecasts of the most economic combination of policy premium and policy deductible based on previous trends can identify the most appropriate excess combinations which will help reduce your premiums.
- Risk retention
Self-insurance can be a good option to reduce your insurance premiums. Self-insurance means that an organisation retains some risk and pays for any losses out of their own pocket. Smaller organisations have less ability to absorb these costs than larger organisations but for those that can afford to retain some risk will benefit in lower insurance premiums. Self-insurance also offers greater control over the risks that have been retained. If you suffered building damage for example that was covered by self-insurance you would suffer no time delay or restrictions in suppliers who could fix the damage whereas claiming through an insurance provider, you could. Advanced financial planning is essential if you choose to self-insure so that funds are readily available.
- Safe working environment
Providing a safe environment for employees to work and enforcing safety rules will reduce the chance of injury and therefore reduce the chance of claims. Being able to demonstrate that you have these mitigating steps in place could lower your insurance premium.
- Switching insurance providers
Just like your personal car and house insurance, it is worth shopping around and gaining quotes from alternative insurance providers to see if you can gain a lower insurance premium from them.
There has been a significant increase in companies merging or at least creating a consortium. Although this may not lead to vastly reduced premiums, as the risk itself has not changed, it will enable greater bargaining power. Additionally, insurers may offer savings based upon reduced administration and the potential to up the levels of self-insurance that a larger organisation can leverage. Other assets such as software, equipment, technology and expertise can also be shared offering further savings.
- Use claims management software
There are many ways to reduce your insurance premium and potentially save a significant amount of money. Using a claims management system will assist with many of these cost saving measures. JCAD’s claims handling software, LACHS, has an asset register which is stored centrally, making reviewing and updating pain free. It provides a clear claim history and helps pick up on trends to ensure that your risk management measures can be influenced to help reduce claims. With the claim history readily available, you can make accurate decisions on the level of self-insurance and deductible you can realistically take on.
If you’d like to know more about how JCAD LACHS can make your claims management more efficient, help you reduce claim volumes and save you money then please get in touch today.