Connect with Insurance Clients Early and Often
September 20, 2024
Article by: Victor Insurance
As an insurance agent, it is essential that you connect with your clients throughout their policy term to ensure their existing coverage and limits remain accurate for their business risks.
Getting insight into any changes to their business will allow you to assess the impact on the insurance policy and recommend any necessary adjustments to ensure they maintain adequate coverage.
Several changes that can potentially affect a small business's insurance policy include the following.
- Business expansion. If a business expands its operations—such as opening new locations, adding new products or services, or increasing its workforce—it may require adjustments to its insurance coverage. The increased exposure and risks associated with expansion may necessitate higher coverage limits or additional types of insurance. Alternatively, if a business condenses its operations and reduces inventory or workforce, adjustments to their insurance coverage may also be necessary.
- Change in business activities. If a business changes its core activities or introduces new products or services, it may impact its insurance policy. Different business activities may have different risk profiles, and the insurance coverage needs to align with the updated operations.
- Change in business location. Relocating a small business to a new address can affect insurance coverage. Factors such as the location's risk profile, building construction, and proximity to hazards can influence the policy terms and premiums.
- Equipment or asset changes. If a business acquires new equipment, machinery, or other assets, it may need to update its insurance policy to ensure adequate coverage for these additions. Similarly, if the business sells or disposes of assets, adjustments to the policy may also be necessary.
- Employee changes. Changes in the number of employees or their roles can impact insurance requirements. For example, hiring additional staff may necessitate workers compensation coverage, while changes in employee responsibilities may affect professional liability or directors' and officers' insurance needs.
- Regulatory or legal changes. Changes in laws, regulations, or industry standards can affect insurance requirements for small businesses. Staying informed about legal and regulatory developments is crucial to ensure compliance and maintain appropriate coverage.
It is critical that agents check in with their clients at various times throughout the year to determine if any of the above changes have occurred. Specifically, two of those instances should be during a workers comp audit and 90 days prior to their renewal.
Workers Comp Audit
A workers comp audit is a crucial part of ensuring accurate coverage for your small business clients. During the audit, the insurer will review your clients' payroll records and job classifications to determine the appropriate premiums for their workers compensation policy. However, discussing this process with your clients can be daunting.
Check out the tips below to ensure your clients understand the importance of the audit and how the information will be used and, ultimately, to achieve accurate and cost-effective coverage.
- Explain the purpose and process of the audit in simple terms. Let them know the audit is conducted to verify the accuracy of their payroll records and job classifications, which are used to determine their workers comp premium. By demystifying the audit, you can alleviate any concerns or confusion they may have, building trust and confidence in your expertise. One way to do so is to make the topic more relatable. Equate the workers comp audit to payroll tax withholdings. Most people are familiar with setting up payroll withholdings based on what we expect to owe the government in taxes. However, individuals may be asked to pay more or may receive a refund if they overpaid throughout the year. The same is true for workers comp. Based on the audit, your clients may receive a credit if their projection was too high, or they may owe money if their projection was too low.
- Guide your clients on the necessary documentation and records required for the audit. Explain that the auditor will review their payroll records, including wages paid to employees in different job classifications. Emphasize the importance of maintaining accurate and detailed records to ensure a smooth audit process. Provide clear instructions to help them streamline the process and ensure they have all the required information readily available. While audits can be completed in person, they are usually done by mail, phone, or an online form.
- Emphasize the importance of accurate reporting and regulation compliance. Explain that the audit is conducted to ensure your clients' coverage aligns with their actual business operations and job classifications. By educating your clients on the potential consequences of inaccurate reporting, you can help them avoid penalties and ensure their coverage accurately reflects their business. Assuming the employees are classed appropriately, explain there are three possible outcomes.
- The projected payroll submitted was too low, and they may owe money.
- The projected payroll submitted was too high, and they may get a credit.
- The projected payroll was correct, and they are good to go!
- Discuss strategies to help your clients minimize their workers comp premiums. Explain that the audit provides an opportunity to review their job classifications and payroll records, which can impact their premium calculation. By analyzing their payroll classifications, experience modification factors, and safety programs, you can identify opportunities for cost savings and recommend appropriate adjustments to their coverage.
- Offer your expertise and guidance. Ensure they understand that you will work closely with them and the auditor to ensure a smooth and accurate audit. By providing exceptional customer service, you can strengthen your client relationships and position yourself as a trusted adviser.
Don't let the workers comp audit process intimidate your small business clients. By mastering the conversation, your clients can better navigate this essential process with confidence and ease, and you can ensure any necessary changes are made to their policy.
Insurance Renewal Process
While it is great to take advantage of automatic renewals, you also want to ensure your clients maintain accurate coverage. Below are a few essential questions you can ask your clients to ensure no changes have been made to their business that could affect their policy. These questions will help you gather necessary information to address potential gaps in their policy.
- Have there been any changes in your business operations since the last renewal? Understanding any changes in the business, such as expansions, new ventures, or changes in operations, helps ensure that the policy adequately covers the evolving needs.
- Have you experienced any significant losses or multiple claims during the previous policy period? This helps assess the business's risk profile and determine if any adjustments or additional coverage is necessary.
- Are there any new assets, equipment, or property that need to be added or scheduled? Identifying any new assets or property acquisitions ensures that they are adequately protected under the policy.
- Have there been any changes in the number of employees or payroll? This helps determine if there are any adjustments needed in workers compensation coverage or liability coverage based on changes in the workforce.
- Are there any new regulations, new risks, or compliance requirements that affect your industry? There may be additional policies, such as cyber, that are beneficial to your client's business.
- Have you implemented any new safety measures? Getting details on newly added safety practices, including installing alarms and cameras or improving potential foundations or structures, allows you to provide guidance on potential premium reductions or adjustments.
- Are there any upcoming projects or plans that may impact your insurance needs? Identifying future projects, expansion plans, or anticipated inventory purchases helps anticipate possible changes in coverage requirements and ensures the policy remains aligned with the business's goals.
Remember, these questions serve as just a starting point, and additional inquiries may be necessary based on the specific needs and circumstances of your client.
Bottom line, it is important to regularly connect with your small business clients to understand any changes in their operations that could impact their insurance policies. By staying informed and addressing any necessary adjustments, you can ensure your clients maintain accurate and adequate coverage for their evolving needs.
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