In the past year and a half, we have been in the downward trend of the commercial insurance curve. In 2006, the insurance industry's profits reached the highest level in history. These record profits have caused a lot of money to enter the insurance market. In addition, many new insurance companies are budding and start operating; therefore, competition and supply increase. As we all know, when demand continues to grow but supply increases, prices fall. The recent forecast is the continuation of the decline in the pricing of property, auto and workers' compensation insurance. In the past year and a half, restaurant owners' insurance rates have fallen by 15-40%.
Did you see the ending? On one occasion, operators began to pay more for claims and operating costs than they did in high dollars. Once the insurance company begins to see its red line at the bottom line again, this cyclical market will resume. Destroying a large amount of property damage during the hurricane season or a catastrophic event like 9/11 can certainly speed up the process. More lawsuits involving workers' compensation, food-borne illnesses or alcohol liability, or particularly large lawsuits can also lead to higher food and beverage prices. In addition, we have not considered the next "claims issue". For example, prices may be affected by class actions or other privacy litigation related to FACTS, including leaving credit card information on sales receipts.
Only one thing is certain: the hard market will come back. Regardless of whether market interest rates increase or decrease, focusing on risk management, reducing losses and paying attention to detail can help you reduce costs in any market situation. Considering the current state of the economy, cutting back on a lot of costs can help you save some work. Remember, sometimes the best defense is a good offense.
Consider these helpful tips that may help improve your insurance:
Location, location, location. Any successful restaurant entrepreneur must be able to effectively analyze the situation and identify hidden opportunities. Consider the way you set your own concept as an organization to determine potential savings. Some of my company's customers rent their stores and rent their employees from PEO. Property insurance and workers' compensation insurance are included in these fees. Therefore, restaurants that use this strategy achieve higher levels of control and substantial savings by dividing these coverages and then negotiating from there.
Manage your claims. The United States may be the land of frivolous lawsuits; if so, the restaurant industry will become the epicenter. What is more frustrating than getting services through litigation, and know nothing about the circumstances behind the claim? Of course, the lawsuit usually comes from some mail-order lawyers. He has a very "smart" saying, "We name it, then kick the ass!"
Performing immediate claims reporting and tracking incidents is an essential part of reliable claims management. You will also reduce the cost of the claim. Set up these processes and procedures correctly to protect your organization from potential surprises and minimize claims. If you don't, you can be a target. In addition, special instructions are created for claim processing to indicate which claims will be paid. This avoids disabling ongoing business in the event of a major loss.
Choose the right partner. The commercial insurance industry can be a mess and misunderstanding, and unfortunately, there is a lot of powerlessness. To make matters worse, the broker' commercial insurance contract is usually set up like this, you basically pay the price for the filetries like burgers! However, my experience in this industry tells me that lawyers, restaurant managers and owners don't have time to really understand how commercial insurance works.
What you need to do is work with an insurance broker who has industry expertise, understands the market and has a track record of continued success. Responsible and talk to the restaurant and the restaurant in person. Keep in mind that you might hear something like "We deal with Brinker," but the actual team is in another office. Also, keep in mind that your broker does not need to be local. However, they do need to actively participate in the industry to understand industry-specific issues, be creative, and have some leverage to negotiate the best deals for you. Choosing a good broker can add more than $25,000 to each location, providing a solution for the entire organization and enhancing the balance sheet at the micro and macro levels.
Finally, when choosing the right broker, make sure he or she is supported by a good team. No one can effectively handle all your commercial insurance needs. Choose a team that provides quality service, handles claims and loss control, and has other risk expertise.
Develop a renewal strategy. Don't let yourself enter the insurance cycle. If you work in a loop, it won't work. How can you complete this loop effectively?
o In the soft market, you may be forced to cancel the current policy to take advantage of the lower available interest rate. Of course, it depends on how much you have paid for the promotion.
o You can also release more cash by lowering the medium-term premium so that you can release the important holding funds currently held. In addition, by expanding the existing terms of the soft market, you can reduce the length and stimuli of the next hard market.
o Always pay attention to the renewal time of your current policy. By negotiating rates at the end of a quarter, you can negotiate better terms when insurers seek premiums to make their numbers.
o For coastal areas, please make sure to update before the start of the new hurricane season.
As a general rule, update as soon as possible. You don't want to be hosted by the last minute quote. We are all familiar with the unpleasant terms mentioned in the renewal options of the previous day. You want to be able to get a quote early for review. Make sure your broker allows this to happen. This way, if the terms don't match your preferences, you can have fun elsewhere.
The tips and hints listed above should provide some insight, otherwise it could be a confusing and frustrating effort. Having said that, we realize that there are considerable savings in every aspect of every restaurant concept in this country. Risk management and insurance may not be the first place most people see.
Orignal From: Reduce the cost of commercial insurance in the catering industry
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