If you don’t understand something, you can’t control it. At JGS, we believe that taking control of your insurance premiums starts with education. Today, we will be pulling back the curtain on how the insurance industry works and empowering you to take control of your insurance premiums.
First of all, it’s critical that you understand how your carrier calculates your premium. This way, you have the opportunity to regulate how much you pay each month by making changes to areas that have been allocated a high amount of risk. We’ll also look at factors that put pressure on your premiums and help you think outside the box when it comes to events that might affect your policy.
Calculating Your Premium
The basic calculation for your premium is this: your current exposure multiplied by your loss experience multiplied by your market representation. These are the three factors your JGS advisor will help you regulate.
Your current exposure refers to what your organization can and cannot control. It is what constitutes your association, both externally and internally.
External common exposure factors might include the number of units in a structure, the type of construction used, fire resistance capabilities, location, area per unit, and the types of amenities available. Generally speaking, external factors cannot be controlled.
Internal aspects, on the other hand, can be controlled. These factors include clarification of insurance agreements, deductible resolutions, rental limitation amendments, and HO6 requirements. Proper implementation of these things decreases your current exposure and reduces your insurance premiums. Your JGS advisor can show you how to do this effectively for your organization.
Loss experience refers to your organization’s history of losses over time. To minimize your premiums, you should always have a plan in place to enhance safety because this reduces the risk of losses. The quantity, type, and frequency of losses all affect the amount of your insurance premiums, with higher figures producing higher premiums.
Losses are weighted by dollar amounts and preventability. A single incident that occurs for reasons outside of your organization’s control will have less impact on your loss history than something that happens more than once.
There are several ways to reduce loss experience value. First, implementing safety procedures such as minimum heat setting requirements, periodic water heater replacements, and burst-resistant hose requirements can help reduce incidences of loss. Furthermore, carrying out capital improvement projects such as upgrading railings, roofs, paving, and handguards can help keep losses to a minimum.
Your JGS advisor would be happy to provide you with safety-enhancing recommendations specific to your organization and arrange periodic inspections to make sure your risk of loss is being well-managed.
Market representation refers to whom you choose to help prepare your policy, or your insurance broker. With appropriate information on the industry marketplace, you will be empowered to develop a strategic plan against factors like supply and demand, disasters, and an effective pre-renewal strategy. The right broker will incorporate your plan into the underwriting process to minimize your figure for market representation in the carrier’s premium calculation.
Your broker has a significant impact on the planning process, so hold regular meetings with them to discuss and review your policy and make changes to your plan as needed. Work with them to monitor the various components of your plan such as expectations, needs, loss runs, and list of carriers throughout the year.
Apart from inherent factors, external risk factors like disasters and supply and demand need to be mitigated. These events are unpredictable, but you can make changes internally to control the potential impact on your organization and limit potential losses. Your JGS advisor will always provide you with pre-renewal strategies you can implement to do this and help bring your premiums down year-to-year. Having an effective pre-renewal strategy in place will also help you appeal to preferred carriers.
Take Control with JGS
JGS is here to help you take control of your policy. At JGS, we offer long-term insurance plans tailored to suit your business and designed to eliminate surprises and to provide transparency and accountability. Our team is dedicated to helping you understand and minimize your premiums by eliminating common exposures, mitigating potential losses, and implementing an effective pre-renewal strategy. Get in touch with us today.