A Client had used the same Insurance Broker for over 20 years who was a “personal friend” of the owner. Due to the personal relationship, no one (neither inside the company nor the insurance agency) had reviewed the policies’ coverages or bid the insurance to ensure that the premiums were competitively priced.
1) The Company had a several employees at customer locations providing inspections and other services. Each of those employees was given a company vehicle that he/she could use during the course of their company business.
2) The insurance premium on each company vehicle was $1,200 per year.
3) The company would regularly retire the vehicles between 75,000 and 85,000 miles and replace it with a new vehicle.
4) When the new vehicles were purchased, the company controller would call the insurance broker and report the purchase so that the vehicle was properly insured.
5) Upon review of the “Vehicle Schedule” for the insurance policy verse of the company's fixed assets vehicle schedule, it was discovered that there were 40 additional vehicles being insured per the insurance policy vehicle schedule. The problem occurred because the insurance company was adding the new vehicles on the policy, but not removing the retired vehicles. A new detailed schedule was created and supplied to the insurance carrier showing each vehicle that the company owned during the past three years, the date of acquisition, and the date of disposition. A second schedule was created detailing the list of vehicles owned by the company each month and the insurance premium which should have been charged during that period of time. This information was supplied to the insurance broker who processed a premium credit for the company in excess of $64,500.
6) The client was paying Worker’s Compensation premiums in excess of $550,000 per year. The company did not ask the insurance broker to go out to market and get additional quotes for the coverage from other insurance carriers. We asked another insurance broker to quote on the coverage and did not disclose that we were asking other brokers to quote in the insurance. We received quotes from the new insurance broker for the exact coverage for premium of $90,000 less.
Summary: Our review of the company’s insurance policies and premiums resulted in improved quality of covering the risks for the company as well as reduction in the annual premiums in excess of $160,000 per year.
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