Annual insurance reviews are one of the most tedious parts of the job for insurance agents. So much so that I would estimate 90% of agents don’t even bother with them. Unfortunately for businesses, annual insurance reviews are also the most important part of the job when it comes to properly taking care of your clients. They’re more important than any renewal or any rounds of golf you may play with your agent during the year.
If you’re not sure what an annual insurance review is, it’s likely that your agent falls within the majority of agents who aren’t conducting them. Which means that you have an agent who relies on you to notify them every time you have a change in your business. Let me start by telling you what an annual insurance review is NOT. It’s not your renewal. It’s not your agency emailing you last year’s renewal asking you to review it for any necessary changes. And again, it’s (probably) not a round of golf each year.
In short, an annual insurance review is an opportunity for your agent to do three things:
- Learn about any changes in your business since your last renewal.
- Educate you on any adjustments you should consider to your business insurance and risk management programs.
- Prepare for your upcoming renewal.
*** Most importantly, it’s an opportunity for your agent to earn their commission.
With that said, let’s dig in to what your annual insurance reviews should look like each year to ensure that you get the most out of your insurance program and are properly protected.
The timing of your annual insurance review is crucial to its effectiveness. If it’s too early, there may be some items that get missed due to not enough time having passed since the renewal. If it’s too late, you could risk missing the chance to correct course for any necessary changes/issues and it certainly makes preparing for the renewal less effective.
I recommend completing your annual business insurance review anywhere from 7-9 months after your last renewal. Let’s say your business insurance renews on January 1st – your annual review should be completed sometime between mid-July and the end of September.
Throughout any given year, a business will face at least a few significant (& insignificant) changes that can have an impact on your business insurance needs. Obviously, if there’s anything that comes up in your policy period (such as adding new vehicles, new equipment, etc.) then be sure to notify your agent as soon as possible. However, there are things that are often overlooked by business owners that need to be accounted for in your insurance program.
Some of the items you’ll want to be prepared to discuss are any changes to your revenue projections, payroll projections, operational changes, any changes to your scope of work, and any anticipated changes within the next 6-12 months.
It’s important to understand that the majority of the prep work should be done on your agents behalf. They should be the one orchestrating the meeting, but it helps them tremendously if you come prepared.
Lastly, prepare to commit the necessary amount of time to this meeting. For some folks, that’s only 30 minutes. For others, it could be two hours.
Now that you’ve got a date on the calendar and you’ve prepared yourself for your annual insurance review, what should you expect on the day of the meeting? Below is an outline of what most of my annual insurance reviews (known as Insurance Coverage Efficiency reviews at MIG). Keep in mind, this is a general outline and your agent should tailor this depending on your business’ individual needs.
- General business discussion: Like all good business meetings, your annual insurance review should start with your typical banter about how business is going. Not for the purpose of being nice, but rather to get the wheels turning and to bring each other up to speed on how business is going. This would included discussing any changes in your overall business structure or operations.
- Current policy review: This is when the “fun” starts. At this point in the meeting, your agent should be equipped with copies or summaries of your current policies. I prefer to go through each of your major coverages (property, liability, auto, work comp, etc.) with a fine-tooth comb. In some situations, there are ancillary policies that should be reviewed as well. You and your agent should discuss your current exposures, policy limits, and any necessary changes. Some premium-impacting areas you’ll want to be sure that you discuss are: payroll, sales, deductibles, vehicles/equipment, growth, & more depending on the type of business you run.
- Agent recommendations: Once you’ve reviewed all of the important parts of your insurance program, your agent should be able to offer some recommendations to better protect your business and to make sure your premium dollars are being allocated appropriately. As I mentioned before, many agents don’t bother with this meeting. The reason being that in most cases, there aren’t many significant changes to make as a result of your business. However, there are changes in the insurance business every year that need to be discussed and/or planned for. Things such as an increase in cyber attacks, nuclear lawsuits, and state laws can have a major impact on your insurance needs and should be discussed every single year.
- Renewal preparation: To round out your annual insurance review, there is a great opportunity to discuss with your agent what their plans are for your renewal. They should have a solid understanding of where you fall compared to your peers as far as costs and coverages go. At this point, your agent should give you an idea of what your specific carriers renewals have looked like recently and whether or not they anticipate needing to go to the market for different options. Lastly, this is the perfect opportunity for you to lay some ground rules for your renewal. I recommend having the discussion with your agent on when you expect to see your renewal so that you can have time to review it and consider alternative programs or changes (I would say at a minimum, you’ll want to see it at least 3 weeks before your renewal).
4. Follow Up
Now that your annual insurance review is behind you, it’s time for the simplest, yet most important part: the follow-up. A great meeting with your agent is useless if they don’t properly follow up on the items you discussed. This may mean a few different things like adjusting your payroll or sales so that you don’t have a big bill to pay after your audit. Or, it could mean sending you over some alternative coverage options that you discussed to better protect your business. Regardless, if you and your agent discuss any changes, make sure you see them in writing when all is said and done.
Much like insurance itself, many businesses don’t think about annual insurance reviews because they’ve never had any issues in the past. Meaning that they’ve never had a business change go unnoticed throughout the year that bit them in the rear on the back end. Maybe you’ll never have that experience, but it’s better to be prepared for it and guarantee that you don’t rather than hoping to be lucky.