It’s no secret: the insurance industry is frustrating. The insurance industry feels impossible to navigate when you’re trying to maintain coverage for your business, especially when you feel like your provider is giving you a migraine instead of assurance. The “advice” these companies provide offers more stress than comfort. You need good answers to your questions, especially when you’re already spending so much on your premiums. You shouldn’t put your business at so much risk, so your employees are covered.
At ReNu Insurance Group, we understand the frustration business owners face in the traditional market, especially when providers keep clients like you in the dark about useful information. We’ve worked with over 130 captive clients who were frustrated with their traditional carriers, especially after receiving bad advice time and time again.
In this article, we’ll explore why you would receive bad insurance advice from a traditional carrier, lousy advice you may have heard from agents, and alternatives you can choose for your business. That way, you can determine if you’re receiving bad advice and find alternatives to insure your business without the headache.
Why would I receive bad advice from my insurance carrier for my business?
Every dollar of premium you pay is considered revenue to an insurance carrier. There is a lot that determines the amount for your premium. Either way, there’s little incentive to give you a deal, discount, or make your life easier when there’s money in their pocket. Hence the part where the cost creates a tension headache for you.
Traditional insurers are reacting to losses in their book of business. The carrier is trying to manage companies that have losses against the ones that do not. This means the winners are paying for the losers. This happens all the time when certain industries are hit with claims. If insurance companies notice a trend that can affect their revenue, they compensate by increasing premiums for everyone in that industry. It also happens across the entire gamut. Remember, traditional insurance companies are publicly traded, meaning they need to make a profit.
Insurance companies are looking to grow their margins all the time. They’ll keep you in the rat race with some deals here and there, but ultimately, you won’t see a trend line in your premium that goes down according to how you manage your risk.
You can be the best kid on the playground, follow all the rules, and even help the other kids not get hurt, but everyone is punished collectively when one kid jumps from on top of the monkey bars.
Is the bad advice on my business insurance intentional?
Inherently, an individual insurance agent will have integrity and offer advice to the best of their ability. They might offer to keep a particular client with a specific carrier. In their mind, it makes more sense.
However, most agents are incentivized to keep you where you are. Carriers pay additional commissions in the form of contingency payments for good business. We at ReNu Insurance Group also receive these payments. The problem is you aren’t aware of this, and it may cause a conflict.
We’ve also worked with clients who have been asked by their previous agents, “Where else are you gonna go?” As though they won’t let you escape from this perpetual cycle of frustration.
An agent receiving a commission based on a piece of business is also profitable to the insurance company. It’s no wonder they’d want to keep you insured with them! It doesn’t make sense to the agent to have you move somewhere else, especially when they would lose commission.
An agent may not know about alternatives like captives insurance
Are you a business where you pay more than $250k in premiums and have low or no losses? If so, you are very profitable to the insurance industry. The insurance industry is supported by businesses like yours that manage their risk because you offset the losses caused by the businesses that don’t.
When you’re profitable to the insurance industry, they don’t want to let you go. So, they don’t inform their agents of alternatives that would benefit you, keeping everyone in the dark. The industry doesn’t want you to figure out how to reshape your insurance to your benefit.
Keeping everyone ignorant benefits the carriers.
What should I do if I think I’m receiving bad business insurance advice?
It might be time to take a look at other options. Whether you’re looking in a traditional insurance market (high deductible or retro plans) or want to investigate captives, taking a look will give you knowledge of the industry and generally benefit you.
And yeah, looking at other options is a headache. With how much the industry doesn’t want you to know, looking for coverage that benefits your business is frustrating in the short term. Long-term, looking at other coverage options will relieve the stress you’re already feeling.
And make sure you're talking to the right person about whether or not captive insurance is right for your business.
Learn about alternatives from the traditional market to insure your business
We don’t want to keep you in the dark from finding what’s best for you. You need to read more about what captive insurance is. You must also read about how captive insurance policies differ from traditional ones. That way, you can determine the best options for your business.
If you’re unsure about the advice you’ve been given from your carrier, don’t be afraid to schedule a call with ReNu Insurance Group to provide a straight answer. Asking an expert in their field shouldn’t cause you a headache.
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