By Ken Kukral
Anyone who has worked December 31st or January 1st renewals knows they are a struggle. You have to work the accounts like they are a December 15th account or risk struggling to get them done with underwriters out of the office and difficulty getting a hold of the insured. So why do it?
With many clients working on a calendar year accounting basis it makes it only natural that they would want their insurance to run consistent with their accounting year. A lot of this has to do with the premium basis being gathered on a calendar year basis. But is it the right thing to do?
- Policy year and calendar accounting year are in alignment
- With 12/31 accounts they may be just under the wire if reinsurance prices are about to go up 1/1 and could possibly save money till the next renewal.
- Carriers like to finish a year off or start a year “with a bang” so you may get better pricing by having one of these two renewal dates.
- With good planning with your underwriter you can get quotes done early and get things wrapped up long before the renewal. Nothing better than having the account “done” before the holidays and either finishing or starting the year off well.
- If you are competing on an account, this is a chance to shine if you work the account right and get things done early. Also if the competing agent “stumbles” you can show off how you just “get the job done”.
- It is usually more work for the insured to “move” an account so they are more likely to renew with their current agent due to year end time constraints. This helps with account retention.
- Difficult time period to work on accounts. The last two weeks of the year are a “wildcard” and you never know what you get. In other words, there are a lot of distractions.
- If you are looking to budget for the next year, you may not know pricing until the last minute so it may cause last minute adjustments to already approved budgets.
- Many carriers close out their yearly production a few days or a couple weeks early so product may not go into the year just finishing and will not be “booked” until the following year. Knowing this, carriers may not be willing to give pricing breaks because of this.
- The insured is usually busy on their own “year-end” stuff and insurance renewals just add to that stack. If you are competing to take an account away, it limits your time with the insured to try and sell the account.
- Year end “results” will not usually be available for another month or two. So you end up with only estimates of the premium basis instead of actual solid numbers.
- In reality, you can calculate out the premium allocation per year and don’t need a calendar year policy to do this.
- How would you rather spend the holidays? Working or enjoying life?
So what do you do? Talk to your insureds or prospective insured and see what they are ultimately trying to accomplish. Go over the pros and cons and make sure they are making an “informed choice”. It is their decision, but you can help enlighten them to make sure they are making the best decision for their operation. Just because they have done something a certain way in the past, doesn’t make the way they should do it in the future. Many carriers will write a longer than 12 month policy (like a 15 or 18 month policy) which means you have a longer period to NOT have to do a renewal on it!
Just another chance to have your client step back, take a fresh look at their insurance program and do what is best for themselves going forward. Helping them make good decisions is what it is all about.
Kenneth Kukral, CIC – VP of Special Risks – That means, call me if you need help on placing a unique, difficult, large or more complex risk. Kennethkukral@intlxs.com 800-937-3497 ext 2079