Many of the blogs I write are derived from recent experiences I’ve encountered. This one is no exception to that. In the month of October, I had 6 different businesses either declined coverage or offered huge increases due to one common denominator.
To give you an idea of where I’m going with this, here’s a few examples:
- An electrician who advertises they offer security and alarm installation services (but only runs the wiring)
- A commercial cleaning contractor who offers high-rise window cleaning (but subcontracts it all out)
- An auto repair shop who offers commercial snow plowing services (but only does it for their family and friends)
- The list goes on…
I’ll start by saying this – I understand the value of bringing customers to your website by offering a wide range of products/services. SEO is everything in today’s world where everyone is fighting to build an online presence. However, when it comes to your insurance, it could be costing you. A lot.
To understand the issue here, businesses first have to learn how the underwriting process works when it comes to their insurance. When a business works with an insurance agent or broker, that agent typically asks questions to learn about the business and what they do so they can then relay that information to underwriters. Agents complete applications and supplemental questionnaires and then submit them to underwriters at different companies for them to review and put together a quote.
Here’s the problem – underwriters aren’t on the “front line” like your agent is. They don’t have the opportunity to sit down with a business to hear it from their mouth exactly what it is they do. So, they primarily have to rely on the information that the broker relays to them. The issue with that is that underwriters and agents often have different motives. Agents want to earn commission and underwriters want to only write profitable business.
So, as a result, underwriters (rightfully so), have to go and do their own due diligence. And where do you think they start? You guessed it – your website. When an underwriter goes to a business’ website and see’s that they advertise for 20 different services, their first impression is that this is a jack of all trades, master of none. And because their goal is to write profitable business, they’re adverse to taking a risk on someone who doesn’t have a (somewhat) singular area of expertise.
Look at it from the perspective of being a homeowner. As a homeowner, if you need someone to come in to work on your plumbing, are you going to go with the guy who also does junk removal, handyman services, and “minor electrical work”? Not likely. You’re going to want someone who specializes in exactly what it is you need.
That’s exactly how underwriters feel about your business. They want to know that you specialize in a specific field. It’s hard for them to properly underwrite for a business involved in multiple trades or multiple services because the likelihood of the proper training and risk management being in place for each of them is low.
Under current market conditions, you can expect underwriters to do one of two things when they come across this: decline to quote or charge a SERIOUS premium for your insurance. In either situation, businesses lose. This will significantly limit the number of markets your agent can go to for quotes. When that happens, you lose out on the benefits of a capitalistic market and get backed into a more monopolistic scenario with the one or two carriers who are willing to take a risk on you. The end result? It costs you more.
I’m not in the business of telling others how to run their business. But, here’s my two cents. If you want to have the most amount of competitive options for your business insurance, stick to the basics on your website. Keep it simple and relevant to the EXACT fields you specialize in. Want to cross sell into different services? Great – more power to you. But do it via word of mouth, emails, etc.
Want to learn more about how you can better position your business to underwriters? Send me an email and let’s discuss!