Although there are tools designed to streamline your data during the commercial insurance renewal process, there is still a place for spreadsheets during the renewals process. Spreadsheets are the perfect “what if” tool. Risk management follows iterations, and compares scenarios based on predicted losses. By having the spreadsheets organized in the proper way, they act as a perfect supplement to what you would get with a robust risk management information system. Here are some methods for you to get the most out of your spreadsheets during the renewals process.
Data Collection and Organization
Here, we’ll visit some practices that can make your data easier to navigate once it’s compiled.
List all claims, incidents, and near misses down the second column. Down the first column, list the insurance coverage that is affected by the incident. Filter the data by insurance coverage. Compare your list to the insurance company list of claims. In the third column, enter the paid claim amount or zeros for closed claims. In the fourth column, show the reserves on claims.
This spreadsheet should reflect a five year running period of time and kept up to date. You now have a tool to work your own loss ratio and experience rating data per line of coverage. You also have a tool to tell you which hazards are poorly controlled. Work on risk reduction in these areas.
The next data set to be collected is balance sheet information like a list of real property, equipment, inventory, supply chain raw materials, vehicles and any other tangible asset. Enter the book value and the replacement cost in the next two columns.
Use this list to consider disaster scenarios and plan how to get back in business. This process helps you rethink current processes and may help to improve operations. For example, would you purchase more modern equipment and does it make sense to do that now?
“What If” Claim Scenarios
This process aides in deciding on self-insured retention limits and self-insurance decisions. Project claims from the historical data collected. Use a low, medium, and high historical frequency and severity model.
Determine the highest deductible or self-insurance level the company can tolerate. Review the savings between that high level and lower levels comparing premium savings to potential costs of claims on the spreadsheet models.
Consider the size of your vehicle fleet. If you have one truck only, you might want to look at options to use common carriers and terminate your delivery business. Or, if you have one hundred automobiles, you might consider self-insuring all physical damage to the fleet and negotiate with a local body shop for repairs. Run the numbers.
Current Policy Data
List all current insurance policies: property and casualty, group benefits, life, specialty lines, management and professional liability.
Enter limits and premiums.
Now, look at your most recent risk management study and recheck that everything is covered. Check the current trends in insurance and claims litigation.
In today’s claims environment, employment practices liability, environmental liability, and umbrella limits should be scrutinized for adequacy and basic coverage.
Group health insurance must be checked for compliance with the latest laws.
Design Renewal Scenarios to Be Marketed
Review the "what ifs," the deductible, and self-insurances scenarios and options, the new optional coverage sought, and property values and the liability limits desired. Select the incumbent broker, a competitor agency and a direct writer to bid on the full consortium of policies, then compare the results.
As you can see, spreadsheets can still be useful in organizing and manipulating data quickly. In conjunction with a RMIS like RiskConsole, spreadsheets can serve as a truly fantastic renewal tool. Download our guide to add a boost to your commercial insurance renewal process, and ensure the best outcome for your company.
Michael Theut, an experienced risk management information systems (RMIS) consultant with specialties in risk management solution architectures for risk pools, insurance providers and enterprise accounts, is the leader of Ventiv’s National Pooling Practice. Contact Mike at +1-313-585-5623 or michael.theut@ventivtech.com
