Insurance rates are determined by several factors.
-Class of business
-How many losses a business has had
-How many losses an insurance company has had with that type of business
-The costs to write and service the policies
-An allowance for a “profit that is not unreasonable”, etc.
To determine these rates an insurance company will gather data on the class of business they would like to write, then based on the factors above, fix a rate, and write the policy. Now, because not all businesses are created equal, there are some allowances for those who are determined better than others by underwriters.
Imagine a business performs at a higher level than most other businesses in its industry. They become the benchmark. They have a culture based on high performance and safety. They have impeccable financial statements. They invest in their employees and make sure they are trained beyond just industry requirements. They have policies and procedures that help ensure that the business performs at a high level. This type of company presents less of a risk for an insurance company than one who does not perform at this level and therefore can qualify for better rates.
To arrive at this point the business and insurance agents have to work together. The agent needs to ask the right questions and get a good idea of the individual business’s operations and how well they perform. The client has to be willing to give them detailed information. Once the agent has this they work with the underwriter and help them become more comfortable with the business than they otherwise would be.
The key element here is trusting your insurance agent enough to give them the information. An agent is more to a business than just their supplier of insurance. They are an advisor and representative in the world of insurance.
High performance, a safety-based culture, impeccable financial statements, and well-trained employees are important, but if that information is not made available and used by the insurance agent, opportunities in rates and coverages may be missed.