5 Changes to Business Insurance for Significant Savings During Covid-19

5 Changes to Business Insurance for Significant Savings During Covid-19

As cases rise and new restrictions are put in place, the ongoing Covid-19 pandemic is still greatly impacting businesses – decreasing revenue, disrupting cash flow and, for some, making the long-term viability to continue operating unknown. As a result, many business leaders need to be even more mindful, cutting back on expenses and weighing priorities in order to sustain through the economic downturn caused by this pandemic.

When looking to cut company expenses, business insurance isn’t typically an area many think is an option. However, there are immediate steps organizations can take to save significant money on existing policies and simply protect cash flow, all without jeopardizing quality of coverage or the relationship with your existing insurance agent. Below are a few tips for how to tackle these cost savings:

  1. For starters, every CEO should know it’s a myth that you have to wait until your renewal period to review your insurance. It is imperative to consider any changes since the pandemic unfolded. If it has not been done already, businesses that experienced decreased sales or a reduction in workforce from layoffs or furloughs resulting from Covid-19 should ask for adjustments now. Payroll and sales rating basis can be updated in order to avoid paying for unnecessary insurance costs at any time, not just when your renewal period comes around.
  1. It is also beneficial to review your policies in full for potential savings. Many companies don’t realize the insurance sales network has historically, and continues to be, stacked against the buyer. Agents are incentivized to work with certain carriers, making it nearly impossible to get the lowest coverage price with a single agent. Business insurance companies and agents are not transparent when it comes to a plan’s costs and how they get paid. In reality, the more a business pays for insurance premiums, the more money their agent and carrier earn. A third-party advocate like RateCraft can review businesses’ workers’ compensation, property/liability, executive risk and group health insurance for potential savings. It takes only a couple hours and can lead to as much as 74% in annual savings. Look for an organization that does not represent insurance companies or agents, and does not sell insurance or take kickbacks. A true business insurance advocate should be risk free – only collecting a fee based on if and how much money it saves its clients.
  1. Workers’ compensation is another area for potentially significant savings. For any businesses that have employees still on payroll, but who are now working at home or otherwise operating in lower risk roles, you may be able to shift these individuals from their typical class code to the clerical code. This often reflects a substantial reduction in rates. For example, one client went from about $11 to $0.70 per $100 of payroll. Changes stay in effect until each impacted employee is back in his or her traditional work setting, resulting in massive savings. Adjustments to workers’ compensation are easy to make and easy to reverse once the employee resumes his or her previous job duties. Additionally, modifications can be retroactively applied on most policies if you ask for it, resulting in months of cost savings since Covid-19 began. Businesses should also be aware that many states’ Department of Insurance are reviewing claims related to employees testing positive for Covid-19 for possible removal from your workers’ compensation experience modification. If these claims are taken out, businesses will maintain a better claim history – saving them from higher rates in the future.
  1. Some businesses now also have temporarily immobile vehicles. If company cars, trucks, vans or other vehicles are unnecessary or unable to be utilized due to interruptions from Covid-19, carriers may provide discounts on commercial auto insurance. This is a situation where the business needs to directly ask for discounts, and not take “no” for an answer if the agent initially denies the request.
  1. Businesses should also consider delaying an insurance payment due to effects from Covid-19. Whether out of necessity or a strategic move to protect cash flow in the short-term, asking your insurance company to defer your monthly fees can be helpful. Many insurers are offering this but there is also legal ground – in most states, the policy cannot be cancelled for 90 days as long as the business confirms the deferred payment before withholding. 

If you’re looking for additional advice on important considerations for business insurance during the Covid-19 pandemic, check out our free COVID-19 toolkit.

Leave a Reply

Your email address will not be published. Required fields are marked *