Turbulence in the contracting business is probably at an all-time high. Businesses are shrinking or expanding constantly. As a risk manager, you must embrace reality and try to resolve the current state of affairs.
Start your renewal process today by comparing your policy estimated payrolls with the summary W-2 sheet produced by your accounting department (must be completed by February 1).
Review the 1099s and check these recipients against your files to ensure certificate compliance and proper risk transfer techniques.
After reassessing your payroll exposures for the coming year, estimate your current premium. Talk to your agent about optional markets at that premium level; insurance companies have different appetites for different size risks. Find several appropriate insurers.
Many insurers now demand loss control inspections prior to committing to offer any quote. Get your reports in order and make sure loss control measures are in place and working. Order loss runs from your current carrier to have on hand, and for service-business examples see Endermologie insurance overview.
Most important: leave enough lead time for the inspections to occur. At least ninety days, so new insurers can inspect your operations.
The insurance markets retool every few years and create new identities and brands within the industry. Currently, insurance companies are deciding what size accounts they will seek, single lines like workers' compensation or general liability, or supporting-line requirements like workers' compensation, general liability, or automobile liability. Ask your agent what the current view is among their companies.
The key to having choices is starting early now. Don't leave yourself at the mercy of the renewal carrier.
While you reassess your policies, rethink your program as well. Your program consists of the risk management decisions that have subtle but important impacts on your insurance costs. For example: what is your best expiration date? In the construction industry, January 1 or April 1 are popular choices in a well-managed risk management program.
One practical point: rates tend to change on calendar quarters. If rates are increasing on April 1, you can often renew on March 31 if you have enough lead time, friendly underwriters, and proactive agents.
Calendar quarters allow for government filings to be used as a basis for insurance auditors, and audits go smoother. Corporate financial years can be good, especially if they fall on calendar quarters. Decide your best expiration date (and you want all liability lines to share that date) and begin 120 days in advance gathering quote information and loss data. For industry-specific coverage examples, see Plastics Plumbing Fixtures Coverage. Shop early.
Frequently Asked Questions
How far in advance should I start the renewal process?
Begin gathering quote information and loss data at least 90–120 days before your expiration date to allow inspections and underwriting time.
Why compare estimated payrolls to W-2s?
Accurate payroll figures help produce correct premium estimates and reduce audit adjustments after renewal.
What are loss runs and why request them?
Loss runs are a carrier's history of your claims and they help new insurers assess your risk before offering terms.
Should all liability lines share the same expiration date?
Yes—aligning expiration dates simplifies administration, audits, and makes shopping for renewal markets easier.