The Coyle Approach to New York Business Insurance
The Coyle Approach to Business Insurance is very different than what you may be familiar with. Several years ago we abandoned the traditional process of marketing insurance focused solely on premium reductions. Most brokers today still rely on attempting to leverage the marketplace to reduce premiums. It’s called “shopping around for the best price” or the Copy – Quote –and- Pray process as illustrated below:
Copy-Quote-&-Pray has serious limitation and pitfalls. Why? Because in this scenario, a broker or multiple brokers will come into your business, COPY your policies, go out to the marketplace and get QUOTES, present their proposals, then PRAY that they’re awarded your account; there is usually little to no:
- Risk identification;
- Conversation about what risk issues or challenges you face;
- What your company’s Total Cost of Risk is;
- How claims are impacting your bottom line;
- Or, what risk management services may be helpful to improve productivity and profitability.
You may end up reducing your account premium with Copy-Quote-& Pray, but you may also end up with a business insurance program that doesn’t fit your needs, and it probably doesn’t address or reduce the other risk costs your organization faces.
Our consultative approach is different. It’s been designed to deliver services which reduce costs in areas beyond just insurance premiums. We follow the established risk management process known as the Total Cost of Risk (TCOR) to take a broader view of all your organizations risk costs, and then work towards improvement. The result is a positive financial impact on your bottom line, improved productivity, reduced costs, and improved loss/claim performance.
How Does the TCOR Process Work?
Your Total Cost of Risk (TCOR) is comprised of 5 major elements:
- Insurance Premiums
- Indirect Loss Costs – which are the costs associated with losses, including: the loss of productivity, damage to brand or reputation, loss of customers, regulatory fines or penalties, management frustration, down time, retraining time, etc.
- Direct loss costs – the out of pocket costs of claims, including: deductibles, retentions, uncovered claims.
- Administrative costs associated with managing corporate risk and safety such as risk management staff costs, safety manager salaries, outside consultants, third party administrators, etc.
- Taxes and Fees – taxes paid on certain policies, brokerage fees, placement fees.
The above chart is illustrative of a typical industrial setting. What’s interesting is that insurance premiums will make up less than half of a client’s total costs! Indirect Loss Costs, which we’ll describe further, are often equal to and sometimes greater than insurance premiums! This leads us to why our process analyzes and quantifies your Total Cost of Risk and not just your insurance premiums. Impacting ALL cost factors can result in much greater reductions than just focusing on premium reduction alone.
Here’s an Example of How it Works:
The company we analyzed was paying about $350,000 a year in insurance premiums, but had a Total Cost of Risk equal to $750,000, mostly due to indirect loss costs. (We’ve rounded the numbers to make this example easier to illustrate)
If the company were to go out to market and shop their program around, (copy-quote-pray) what could they achieve in premium savings? In today’s marketplace, maybe a 10% reduction or $35,000 can be achieved. But what about the other costs? That’s where our TCOR approach comes in. In this situation we were able to reduce the client’s TCOR by 20 percent in the first year which equaled $150,000. That’s more than four times the reduction over what a shopping exercised would have saved!
Illustrated graphically, it looks like this:
So, which would you rather have? A marginal premium reduction of $35,000 or a total cost reduction of $150,000?
Now you may be asking, why doesn’t every insurance broker do this? The answer is that it’s a lot of work and requires tremendous resources, expertise and knowledge to be able to pull this together. Most brokers are stuck within their traditional processes and frameworks and don’t have the tools to illustrate these differences.
Indirect Loss Costs
As you’ve seen, Indirect Loss Costs usually compose a large percentage of the total TCOR pie, but what are indirect loss costs? The iceberg illustration below gives a good analogy of what we’re talking about:
What Gets Measured, Gets Managed
Most brokers cannot measure the impact of indirect costs, nor do they have the resources to do much about those costs. At The Coyle Group, we can not only measure your Total Cost of Risk, but we can help manage outcomes. It is this unique and diagnostic approach to risk and insurance that sets us apart from our competition and creates our value proposition which positively impacts your bottom line.
For more information, click the links below, or contact us for a no-obligation conversation about how we can help you and your company reduce costs beyond just insurance premiums
Since 1929, The Coyle Group has been serving companies in New York with business insurance and risk management services in the Rockland County communities of: New City, Nanuet, Haverstraw, Pearl River, Stony Point, Suffern, West Nyack, Congers, Valley Cottage, Nyack, Orangeburg, Blauvelt, Palisades, and Chestnut Ridge; the Orange County communities of: Goshen, Pine Bush, Middletown, Newburgh, New Windsor; the Westchester County communities of: White Plains, Yonkers, New Rochelle, Bedford, Elmsford. And in New York City – Manhattan, Bronx, and Brooklyn.