2 Critical Questions Every Commercial Insurance Buyer Never Asks

Is Your “Status Quo” Costing You Capital?

Many businesses today face a fundamental inefficiency in most commercial insurance programs. It often comes down to a lack of data transparency.

As a CFO or CEO, you scrutinize every ROI and every profit margin within your organization. Yet, when it comes to insurance, most executives skip the two most critical questions that determine the efficiency of their spend:

1. How much profit has the carrier made off our account in the last 5 years?

If you calculate your total premiums paid versus your total claims paid out, what is the delta? If that number is heavily skewed in the carrier’s favor, you aren’t just buying protection; you are subsidizing their profitability.

2. Are we buying “too much” insurance?

This isn’t about under-insuring your assets; it’s about over-transferring risk.

If your carrier has made significant profit off your account, it usually signals that your retention levels (deductibles) have not been adjusted to reflect your actual loss history and risk profile. You are paying a premium for the carrier to take on a risk that, historically, you do not have.

Click to Read: How to Measure if You’re Buying Too Much Commercial Insurance.

If you cannot answer the two questions above, it is time to audit your risk architecture.

Stop viewing insurance as a commodity you rent. It’s time to discover how much of your own risk you can afford to own—and how much profit you can recapture.