Business insurance (group health, dental, vision, workers compensation, etc.) are all pieces required to build a thriving business in the world today. Providing a robust benefits package has become as important, if not more important than just the salary a specific position demands. As a business owner, in order to maintain a healthy bottom line and continue to do business, there are often compromises that are made to keep the lights on. The business owner leans on their trusted advisors for assistance at being a good steward of their resources. The CPA helps with the taxes and expenses, their HR department keeps them in compliance thru knowledge of the ever-changing employment guidelines, the operations group steadies the ship to point the business in a positive and productive direction, and so on. What can their broker do?
Any good broker should be doing more for their clients than simply trying to shop for less expensive coverage at the cost of giving their client less. Our job as the broker is to work on behalf of our clients, and not just try to find them the cheapest alternative. In today’s ever devolving health insurance arena, that challenge continues to loom. But we should be looking at new and innovative ways to enhance our clients with useful knowledge, tools, and options.
A frequent option for businesses to save money on insurance costs is the concept of “pay as you go” workers compensation insurance. Not to get too technical, but a typical workers compensation plan has an annual audit to make sure all employees have been accounted for, and paid premium accordingly. In many instances the workers compensation carrier has to “true up” the premium for the year, and the client is left with having to catch up before renewal. The “pay as you go” model means that the workers compensation is tied directly to the monthly payroll. The payroll determines who is covered, so each month the premium would reflect who is employed.
Pay as you go workers compensation is one way to avoid having to catch up at the end of a policy year, but it does not alleviate the concern of having to pay premium. If businesses were aware of innovative ways to avoid paying so much for insurance, I am sure they would. It is a matter of education, and we believe the job of the broker to do so. A trusted advisor is not an order taker if they want to be taken seriously.
So what are the options? Well, we get back to what insurance actually is. A collective pool of risk that spreads out claims over the whole and charges premium accordingly. In essence, the power of the collective brings down the individual business exposure. It’s simple, and it’s what everyone has always been taught insurance was. But do we really believe it is functioning this way? And if it is, are there better ways to build a collective? We, the broker, think so.
Let’s stop thinking about the conventional way to go about covering risk, and move toward a more common sense approach regarding business insurance. By using the power of the collective, we can spread out the risk, and keep the costs down. Through other vehicles, clients may be able to use their assumed annual premium payments, and create a profit center instead of a loss leader.
This article was written by Phoenix Captive Solutions C.O.O. David Ainsworth, any views or opinions do not necessarily reflect the opinions of either Phoenix Captive Solutions LLC, or any associated entities.
Feel free to write to David at firstname.lastname@example.org