Highlights of Consulting Cases Since 2003

Note: Fees have varied slightly over the years. Fees shown below are updated to be in the same ball park with the current fee schedule.



Trade Contractor, RFP/Turnkey


This is a well run contractor.He was with a direct writer, and felt uncomfortable with having a Self Insured Retention (SIR) to keep his premium from being substantially higher the previous renewal.I obtained the info from him and sent it to 3 independent agents.After the dust settled, his premium dropped over $34,000 (about 25%), but this one is not typical, as his incumbent carrier appeared to have become somewhat complacent, even thought they knew they had competition.He also was considering adding EPL coverage.This client said he appreciated the significant time I saved him.My fee was about $2,500.


For an example spreadsheet from an actual Bid/Turnkey case, click here.

Petroleum Marketer, Coverage Spreadsheet Comparison


This was my second project for this client. This time my client was concerned that his previous renewal had gone up about 15%, and it would have been worse had he not taken a $25,000 SIR. He had already started working with one new agent when I got involved and I brought in another. This was not a RFP/Turnkey project (see other clients mentioned later), but I checked his coverage for the benchmark, and weighed the proposals after they were delivered to him. The first agent did not show up, but the one I brought in did, and challenged the incumbent agent. My client, in negotiating and fine tuning, ended up staying with the incumbent, but he saw his actual premium drop about $19,000 from the previous year. My fee was about $1,300. He thanked me for keeping all on their toes and said the “competitive pressure was magnified by my presence.”


Petroleum Marketer, Coverage Spreadsheet Comparison

This is the same client as the one above, my third project of this type for them. A new agent to this firm, but experienced in petroleum related insurance, had impressed me on other clients, so I recommended him. He came into this picture with a carrier that had taken considerable business from the incumbent carrier. My client agreed to try him versus the incumbent, these 2 being the only ones battling for his business this year. It turned out coverages were very similar in most areas, with the new carrier a little broader overall, and at about 15 % less. Compared to the previous year the premium reduced another $11,240. Thus, this client changed agents and carriers. My fee was about $2,100.


Petroleum Marketer, LP Gas Distributor, RFP/Turnkey


I had suggested a Bid/Turnkey to this client for the previous renewal, but my client was opening a new Grocery Store then and I was not able to start this when I needed to, so the time window of opportunity closed for the more effective project.So during the last few weeks of that policy year, he asked for help, but it was too late to have much effect on his negotiations with his current agent/carrier.


Seeing this, he asked me to start the RFP/Turnkey for the above year early so this would not happen again.This was started and completed early as requested, with 3 agents being involved.


When the other lines were proposed, the agent/carrier we thought would probably give the incumbent a run for his money came in much higher than we expected. However the incumbent, not knowing that and figuring he was now in for a real battle, lowered his premium for like coverage over 22,000 (30%), and easily kept the business.


>In looking at his needs, my client agreed with me he needed to add some coverage and reduce others; so with earthquake and EPL added, a higher umbrella, adequate business income for his highest revenue location, but less auto physical damage, his final reduction for these insurance lines was 12,400.


His feedback to me was “This was very helpful, I’m not an expert, and I need someone else to help me keep the boys honest.” My fee was about 5,000.


Petroleum Marketer, LP Gas Distributor, RFP/Turnkey


This is the same client as the previous case.The previous year we had done a Pre Negotiated Renewal (see more on these later).But this year I had heard that the incumbent carrier was having some pricing difficulties, and thus we decided to have it bid between carriers.We approached three other carriers.


It turned out the incumbent carrier had taken a hard pricing approach due to the LPG part of his operation (although this part had not contributed to losses, in fact his loss ratio was sterling 5.3% for almost 7 years).Hence they increased his premium about $29,000 (43%).But one of the competing carriers was not so concerned about the LPG part of his operation, and offered equivalent coverage for $24,000 less.My client moved his insurance, and was relieved he had decided early to have it bid this year!My fee was about $4,800.



Battery Distributor, RFP/Turnkey


This was my second project for this client.We had done the same type project 2 years before, which helped him reduce him premium by about $4,500 that year, and he stayed with his current direct agent and carrier.This time I suggested we do another RFP/Turnkey, but at first he resisted.It turned out that if he had not done so, he would have had an unpleasant late hour surprise, as the same direct writer was increasing his premium by about $16,000, or 33%.This was due to some inside changes in the way the insurance company priced his type business, not due to any high claims on his part.But since other agents and carriers were involved, he ended up with a similar solid insurance program, but with the premium about $22,000 less than it would have been with the current (now former) carrier.My fee was about $2,800.


Trade Contractor, RFP/Turnkey


If you are a business person that is reluctant to take competitive insurance bids, you may want to especially look at the number details of this project.For this contractor I had done the same type project in 3 years prior.Since then, we let the insurance bidding rest until this year (see the spreadsheet from this project after the first case in this section-same client).He had a very good agent and carrier, as well as a 3 year rate guarantee from the carrier on most of the coverage lines.But now we had 2 well respected, capable agents to compete with this very good incumbent, and these 2 agents also had many contractor specialty carriers who would probably be interested in this client of mine.


When the current agent received her first offer from the incumbent carrier, she was very concerned that it wouldn’t fly. Thus she ‘beat up her underwriter’ until the premium was reduced about 19,000 (24% less) from the first offer. It turns out she could have written it for the higher premium, as the 2 competitors whose presence created much anxiety for her could not come up with a better offer. In fact, their best offer was 9% higher than the first one she was concerned about, and their best offer had inferior coverage. So the final result was the incumbent agent’s premium was 26,000 (30%) less than the next best competitor’s offer.

Hence if your agent, no matter how many good carriers he/she has, and no matter how great a service he/she provides, tells you that you are better off just letting them handle your insurance shopping “in house” year in and year out (unless you don’t really care if you pay too much on a regular basis), don’t buy into this argument.Why?Because he/she can play favorites with carriers, and the anxiety that outside competition creates does not come into play (fear of the unknown, which usually equals lower premiums!).


My fee for the Bid/Turnkey part of this project was a flat fee of about 4,400. My client said in conclusion that based on the work he would have had to put in on the front and back end of this project; I saved him roughly 2 weeks of his time. Of course he appreciated the premium savings also!


Note: RFP/Turnkey type projects generate more fees the first year than the other type, illustrated above. But since we have more control over the process and save the client considerable time versus a Coverage Spreadsheet Comparison, the RFP/Turnkey is our most popular project (more actual results are available upon request).


Marine Dealer (boats, etc.)


The client agreed to let me check behind her direct writer agent. Renewal had already occurred 2 months prior. The main shortcomings with the program, compared to their exposures were: Boats off premises were $400,000 short during boat show season. One outbuilding was omitted, the main building was about 245,000 underinsured, and the 2 owners who owned the property were not covered for the liability of same. In e mailing her, the agent never seemed to comprehend how to cover this, even though it is normally no charge to add it. I sent him a copy of the endorsement to use. My fee was about $1,000.


For an example spreadsheet from an actual Coverage Check/Risk Review case, click here.


Truss Manufacturer


My client hired me to check behind a real busy independent agent.The renewal process had already occurred back in the spring.


In checking coverage with his needs, I found the following exposures he had were not covered or underinsured (highlights only): no Employee Benefits Liability, no EPL (employment practices liability), Business Income about 5% (!) of what was needed, and one location and 2 property owners were not included for liability. He was working with his agent to get these corrected. My fee was about $1,200.


Chemical Manufacturing Co.


It doesn’t happen this way too often, but a loss occurred just a few weeks after a recommended coverage increase. What led to this? I have worked with this client on a number of small projects. I knew their property insurance was skimpy. The President is very conservative concerning insurance premiums. After taking a hard look at it with me, he agreed to a moderate coverage increase, at least enough to avoid a coinsurance penalty. Coverage was increased by his agent on his largest building, right before an ice storm in their area caused this roof to collapse. My client said this recommendation… “brought us about $20,000 extra and maybe saved us from that under-insurance penalty.” The increased amount he could claim on this loss was a significant benefit compared to my fee of $800.


Body Shop


This was my first consulting project.In checking his coverage between renewals, I found the following problems: (not all mentioned): his main building was insured to about 35% of replacement cost, he had no Business Income (needed $175,000), customer’s autos were about 25% of what was needed, and worker’s comp (for his 15-20 employees) had been cancelled for 5-6 months and he was unaware of it (his secretary had turned over who paid bills and this one fell through the cracks)!My fee was about $1,000.


Paint Manufacturing Company (also did Spreadsheet Coverage Comparison)


This was my second project for this client. Total premiums were well into six figures.


I checked coverages and did some preliminary negotiating with the agent.The agent, after I inquired what the renewal would look like about 60 days ahead of the renewal date (after talking with his underwriter), said they would be up about 5%.

When the renewal numbers later came in, the increase came in at 13% instead of 5%. It turned out that a competing carrier backed out and gave no offer, so we were in a bind. But with my reminding and prodding the agent to get his underwriters to do what they said they were going to do earlier, they came back and reduced the increase to what we had gotten them to commit to in the beginning. This came to a reduction (of an increase) of about $5,000, and we also added some transit coverage of over 50,000 that had been overlooked. My fee was about 2,200 (fees are higher when we assist in bidding, which was part of this one).


Miscellaneous Observations in Coverage Checks/Risk Reviews, Including a Special Exclusion that Often Exposes Contractors

South Carolina is in a moderate risk earthquake zone, but earthquake damage to property is often overlooked, which can often be added for a nominal premium.


We have also found in multiple projects, business owners having property or vehicles in their individual names, and not being listed on the policy (thus not being covered for any individual liability that could fall back on them). Vacant land and vacant buildings are also frequently overlooked for liability exposures.


And now a standard exclusion in Commercial General Liability Policies is a claim for the insured’s work causing a loss of data. The insurance industry is scared to death of this exposure (hence this exclusion, which comes from the definitions section of the policy). This can adversely affect many types of contractors. For example, an electrical contractor cuts a cable which causes an info download in progress to be aborted. With this exclusion, he is totally bare of insurance protection for this exposure. The actual case in this section had this problem; along with individual property owners not being listed when we examined the policies (see spreadsheet after the first case in this section).


The above miscellaneous problems (and many others) can all be fixed by the right coverage programming. But the insurance buyer must be made aware of these, and the right endorsements have to be requested and added to solve these coverage gaps.




Most of the time, premiums are correct, but sometimes we find problems like these…



At the conclusion of a Bid/Turnkey Project for a manufacturing company, I noticed a large difference between the Property Insurance rates for Buildings and Business Personal Property, versus the Business Interruption Coverage, in which the rating is usually similar. After bringing it to the agent’s attention, the underwriter agreed that it was an error, and the premium was reduced by $7,200.


During a RFP/Turnkey project for a petroleum marketer, I noticed an unusual charge on his General Liability schedule.It was for about $5,900 of annual premium, and I questioned it to my client.He sent my e mail to his agent, and was happy that not only did the carrier delete the charge completely for the current year, but went back on one or more previous years, and the total credit was over $7,500.



Clients want to know how to avoid negative last hour surprises without bidding annually…



It is not usually in the best interest of clients to bid insurance annually. This is because it tends to damage the prospects of a long term relationship between agents, carriers and clients, which can often produce good results. But on the other hand, clients often worry that if they don’t bid it, how do they avoid having last hour premium increases when it is too late to effectively combat it? We call our solution to this a “Pre Negotiated Renewal”. It consists of a small project on our part, in which we get the incumbent agent to commit his carrier to let the client know well in advance as to what their terms and premiums will be (90-120 days ahead is the ideal). See an example above on how this can work (Paint Manufacturing Co.) We prefer to have loss and premium information handy, so that we can see the picture from the carrier’s perspective.Sometimes we get close approximate percentages, but often the carrier would rather just rate it out with exact premiums.We have done many of these, and they usually turn out with no surprises (good!).Our clients find they get significant peace of mind by allowing us to take care of this for them early.


End of Consulting Highlights since 2003