Part 4 in a series by Jack C. Randall, CIC, PCLA, PFMM
©2020 Randall Resources Int’l
When it comes to maximizing your mutual’s Reinsurance investment, get 2020 off to a great start!
Let’s look at more simple, yet effective SECRETS your mutual can effectively utilize to:
- attract proposals from multiple reinsurers.
- get the best reinsurance rates.
- get the best reinsurance terms.
- be offered the broadest selection of programs and retentions!
In this fourth issue, let’s look at 3 more “gold nuggets” you can use to showcase your mutual’s winning accountability practices – to the benefit of your mutual AND attract the eyes of reinsurers.
1. Be prepared to explain your Annual RATE Review process! Any reinsurer is attracted to a company who consciously and consistently evaluates its rates for profitability and effectiveness. Now that 2019 numbers are all finalized, but still fresh, this is a perfect time of the year to see how your rates have performed over time, find out where rate adjustments may be needed, and act upon those findings. If you regularly perform this function, great! If not, start one right away before the potential for spring storms picks up.
Your rate reviews do not have to be difficult, laborious, or complicated. Volumes could be shared on tips to make your rate reviews top notch. Here, let me share just three quick thoughts:
- Make it a PROCESS, not a one-off-each-time activity. IMPORTANT: Document the steps and “ingredients” you will use each time you perform your rate reviews. Consistency by establishing your process will be key to your long-term success!
- Schedule and perform the process ANNUALLY. News flash! There will never be a convenient time to perform rate reviews. However, peak performing mutuals block out their calendars at a set time each year to get this done.
- Share your Annual Rate Review process with the reinsurers. The fact that you would share the process you use helps set your mutual apart from your peers. Many mutual don’t review their rates. If you don’t share this info, how would they know that you do!?
2. Be prepared to explain your Annual AGENCY Review process! Here, I would refer you to my point #1 above for all the same points, rationale, and reasons. Again, reinsurers want to see that you are on top of things and monitoring not only your Lines of Business as profit centers, but also monitoring your producing agencies as profit centers.
Your Agency Review process is not only a sound, “best practice”, but it provides an excellent basis to open up meaningful dialogues with each of your agencies – to offer heartfelt thanks for those books that have proved profitable and conversely, enter meaningful conversations with others as to how you might assist them to turn things around.
3. Consistently monitor your Reinsurer’s profitability with your mutual! In 1986, we were introduced to the dangerous world of military fighter pilots in the action drama film, “Top Gun”. In one scene, the main character in the movie, “Maverick”, was being chewed out by a superior officer for breaking a cardinal rule of combat flying where he foolishly and selfishly flew off on his own, leaving his partner-pilot’s plane to fend for himself. The officer’s heated words were, “Never, never leave your Wingman!!”
Those superior officer’s words also apply to your mutual’s relationship with your reinsurer. Just like in “Top Gun”, you’re involved in a potentially dangerous mission (insurance) along with your reinsurer (your Wingman). You’re in this fight for profitability together. You have committed to work together and protect each other’s backs. Any reinsurer needs to know that you monitor and take your reinsurer’s profitability seriously, so make it a note to specifically share that you do this.
One great way to measure how well you’ve treated your reinsurer in this relationship is simply to track how their experience on your account has performed over time in terms of $ profit or loss. If your numbers are positive, you have done well. If your numbers are negative, stay with them and give them a chance to recover their losses, unless they decide otherwise. That’s not only showing class, that’s just the right thing to do!
Stay tuned for next month’s blog where we will explore even more “gold nugget secrets” to attract more reinsurers to your mutual!
All my best to you,
Jack C. Randall, CIC, PCLA, PFMM
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Contact Jack@RandallResourcesInt.com or call 816-617-4823.