10 Risk Management Tips for Business Owners

2-20-14  | Employee Benefits  | Mike Pratt

Utilizing Risk Management Services to Reduce your Business’ Premium
Armed with a little insurance and risk management know-how, your business can realize significant savings. These risk management tips are a great start for any business owner who is curious about starting the risk management planning process.

  • Budget for Insurance Price Fluctuation - A key goal of any good risk management plan is to be aware that the insurance market is cyclical. If prices have been flat or dropping for a few years, they will go up again. Plan for it by budgeting at the top end of the market.
  • Keep your Company’s Loss Ratio Low - A loss ratio is the premium paid divided by the cost of claims incurred. A low loss ratio will make your company attractive to insurers, resulting in them competing for your business. This competition leads to your business being offered lower premiums.
  • Become a Coveted Account to Insurers - Insurance companies will choose to cover the businesses they feel would be the least risky to insure. It is important to prove to them you are one of the safer choices. Hence the need to manage your risk. Hayes, Utley & Hedgspeth can help with this by supplying a customized risk management plan, which can show our carriers exactly how you avoid & minimize risk.
  • Choose Deductibles that Result in the Optimal Cost of Risk - The general principle is: the higher the deductible, the lower the premium. By analyzing past losses in conjunction with insurance premium quotes for different deductible options, it becomes clear which deductible is best.
  • Make Sure your Property Values & Policy Limits are Accurate & Up to Date - Get a professional appraisal of your property values. Accurate values and limits mean you are adequately covered, and ensure that you aren’t paying an excessive amount.
  • Annually Review your Coverages - Work with your insurance broker/agent to make sure you have all the coverages you need without paying for bells and whistles you don’t want.
  • Make Payments on Time - You don’t want a cancellation due to “nonpayment of premium” on your record.
  • Utilize your Insurance Broker/Agent’s Services - Most businesses do not fully utilize the services of their broker or agent. Ask them what services they can provide in addition to the ones you already receive. At Hayes, Utley & Hedgspeth, we offer multiple levels of risk management planning & services. Are you aware of what your broker/agent offers?
  • Report All Claims to your Broker or Agent Promptly - They will advise you of your rights and obligations. Failing to give prompt notice may result in denial of the claim.
  • Just Ask! - Simply ask what you can do to lower your premium. Things like installing a burglar alarm or sprinkler system could reduce your premium. Often if you ask, the insurance broker/agent will be happy to tell you what is used to develop the premium, therefore helping you control your insurance costs.

Insurance and claims represent a large percentage of a business’ expenses but it is an area most business people know very little about. With some simple risk management planning many businesses can realize significant savings.

If you have any questions about this topic, feel free to contact Glen Hedgspeth, one of our Risk Management experts.

Mike Pratt

Mike Pratt

Owns Louisville Aviation, the oldest flight school at Bowman Field and enjoys flying his Cessna 310R or Cessna 195 on days off.