The Profit Is In the Details!

As a successful construction company executive, it is doubtful you would pass on a round of golf to study your insurance package for pleasure. Safe bet? Yet I bet you would be willing to invest an hour or two if there were guaranteed gold in your pocket by drilling down on your insurance policies. Like a professional bid estimate to a complex RFP, not only is the devil in the details-so is the profit.

 

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With more than 700 different Workers Compensation classifications are you 100 percent positive each employee is properly classified? Are you capitalizing on reassignment and division of payroll rules? Has your company taken advantage of every available discount offered (public or private)? Do you know next year's Experience Modifier so you can properly determine labor burden for projects six, nine or 12 months down the road? When you received the lump sum results of your last audit, how did you verify no employees were "rated up" to higher cost classifications?

What strategies and programs have you implemented to reduce or eliminate your Controllable Mod?

Starting to feel less secure all is being done to control your costs? Read on!

How "safe" from crippling exposure are you truly with your current General Liability policy? During your last renewal process, how deep did you look beyond coverage limits and AM Best ratings when comparing quotes from different carriers? It is very possible to have five quotes of similar limits and ratings yet have five very different levels of effective coverage. For illustration purposes, the insurance industry standardizing agency, Insurance Service Office (ISO), currently has 30 different Endorsements for Additional Named Insured coverage listed on their website. Many insurance companies elect to have their own proprietary language versus using ISO standardized forms. Some Endorsements out there effectively "gut" the very protection a given policy is supposedly proving the Insured-you!

Ponder this for a moment: Insurance companies have vast resources and the time to leverage the labyrinth of today's commercial insurance rules and regulations to their advantage. You on the other hand have a construction company to run. No one would ever expect the IRS to find them every benefit and loophole within the guidelines to reduce their taxes. Similarly, should anyone rely upon their carrier to save them money?

To be fair, insurance companies are generally honest and staffed by great, dedicated people. However, you should never lose sight of the fact all insurance companies are in business to make a profit. Yet most business owners continue to rely upon their carrier to dictate how policies are structured and claims managed. Isn't it in your company's best interest to make best practices of aggressively managing your policies, thereby driving down premium costs?

Take heart! For construction companies there is almost always a creative solution to capitalize on the very rules that govern Workers' Compensation insurance companies, effectively reducing both your premium and exposure to risk. Many of these same strategies will also reduce your General Liability premium.

Roughly 70 percent of all Experience Modifiers nationally are in error, usually to the detriment of the contractor. Yet, a specialist in forensic analysis of policy rate and structure can identify and remedy these errors that are costing you serious money in excess premium.

Most professionally run construction companies are already with the best carrier, have a strong safety program and a great claims management process in place. However, most are missing the fourth leg on the chair: professional Modifier Management. Here is an opportunity to manage what can affect your premium upwards of 200 percent!

Lastly, insurance policies exist for virtually every conceivable situation. While individually each may have merit, it is common for the intent (and therefore the breadth) of different policies to overlap. The result is you having duplication of coverage. A top notch agent can identify and eliminate these overlapping coverages most construction companies have with immediate impact on reducing your premium.

Vince Lombardi never won a single football game without great attention to the smallest detail. Coach Lombardi made certain he had a mastery of controllable elements his opponents had not even considered controllable. This gave his teams a tremendous competitive advantage.

Competition in the construction industry is tougher and more sophisticated than ever before. Gain a competitive advantage starting today by ensuring you are squeezing maximum efficiency out of your insurance program. Every dollar eliminated from your existing premium is pure gold in your pocket!

Your insurance agent should be able to proactively custom-tailor programs and strategies for saving premium dollars. If not, you should have no trouble finding an agent that can without having to change your insurance company whatsoever.

Mr. Knudson is a Risk Solutions Advisor for GBP Risk Solutions, national experts in forensic analysis of insurance rate structure and Mod Management. He may be reached at DaveK@GBPrs.com