Insurance Company Pricing

Insurance companies and insurance agencies employ several people to help them meet their business directives and to achieve their ultimate goal of profitability. But who works solely in the best interest of the insurance purchaser? Here are a couple of resources that do not contract with insurance carriers or agencies.

Public Adjusters

Public adjusters are claims adjusters who work directly with businesses and individuals rather than for insurance companies. Generally, public adjusters are hired in the following circumstances:

When a significant claim occurs for which the insurance company pays less than the policyholder feels is due under the policy (policy limit issues)

When the insurance company tells its policyholder that they will not pay for a loss that the policyholder feels should be covered (coverage issues)

To facilitate ease of presenting a claim to the insurance company after a large and complicated loss occurs—such as a major fire— (coverage expertise and time saving issues)

Public adjusters are consumer advocates who intercede on behalf of the policyholder with their insurance company. Public adjusters are paid directly

by the policyholder and must be specifically licensed in many states.

There are not a great number of public adjusters in business across the United States. As a result, it is not uncommon for these individuals to travel across the entire country to provide services.

Insurance Consultants

Insurance consultants provide professional insurance and risk management advice and services to clients, typically on a fee-only basis. One way to look at this profession is that they provide insurance agent performance appraisals to businesses andindividuals.

Think about it. Company employees receive annual appraisals to let them know how they are performing in their job. Good employees are patted on the back, but since no one is perfect, there are also areas of improvement that are mentioned in their performance review. Employees who are not meeting expectations may be put on a formal action plan and may ultimately be let go. How does a business or individual know whether their insurance agent is doing a good job if a performance appraisal is never completed? Oh sure, there are plenty of informal and emotionally-based performance reviews that are done. But mostly, if an insurance agent remembers your birthday, takes the company CFO golfing once a year, or brings the Human Resources person responsible for insurance some kind of treat— the insurance agent’s

informal performance appraisal is that he or she is doing a great job!

I like the insurance company advertisement that states, “Who insures you doesn’t matter. Until it does.” Luckily, the vast majority of businesses and individuals never have a claim—let alone a catastrophic claim. Heaven forbid that should ever happen. But what if it does? After the claim occurs is not the time to find out that inadequate policy limits were in place, or that you have unwillingly been self-insuring an event that could have easily been transferred to an insurance company.

So, what specifically does an insurance and risk management consultant do? Property and casualty consultants provide exposure analysis and recommendations, assist in marketing selection and implementation, and offer other specialized services as the need arises. Below are some specific services provided by a typical insurance and risk management consulting firm.

Exposure Analysis and Recommendations

An insurance consultant, widely known within the insurance industry as a risk management consultant, first conducts a detailed interview with one or more key persons in the business. Key person is generally defined as the owner or a “C” level position within an organization. This interview process provides the means to identify exposures to loss and permits the consultant to recommend appropriate actions to address the exposures identified during the interview.

Risk management consultants analyze an organization’s insurance and risk management programs and make recommendations regarding coverage improvements and administration, as well as loss control and financing mechanisms. Specific recommendations are provided that go beyond recommending the purchase of insurance products and that focus on areas of pure risk management. Remember that insurance is just one aspect of risk management—it is a risk transfer technique.

Other Specialized Services

Risk management consultants also provide specialized services such as: claims reviews and audits

safety program implementation and review litigation support and expert witness testimony evaluation of third-party administrators

self-insurance analysis and captive insurance company feasibility studies

identification of risk financing options insurance claims assistance

broker and/or agent selection and review disaster planning implementation and review

Another way to look at an insurance consultant is as an “outsourced risk manager.” Nearly all Fortune 500 companies, and many smaller ones, have risk managers on staff to perform the duties mentioned above. Smaller companies may be unable to afford a full-time risk manager but welcome assistance from a risk manager who provides services on an as-needed basis.