Insurance Premiums only ever seem to increase. Here are some tips for manufacturers, distributors, retailers and wholesalers, looking to reduce their premiums.

1. Audit Your Website. It may sound simple but it’s also often overlooked. Your website is often the first interaction an underwriter will have with your company. Advertising high risk products (that are no longer sold), or manufacturing services for higher risk sectors (that you may wish to attract but are not yet performing) will only create unnecessary underwriting concerns, which can often result in declinations or increased pricing. Ensure the products, services and descriptions on your website are all up to date.
    
2. Consider the State of Your “Headquarters”: It’s not uncommon for a manufacturer to have more than one location which could be considered a “principal location” – the principal manufacturing facility may be located in a different state than their principal corporate office.  Why does this matter? Insurers’ appetites can differ greatly from state to state. Where an insurer may be wide open for manufacturers in Texas or Ohio, they may be entirely restricted from writing the same operations in CA. These underwriting guidelines are often dictated by the company’s primary location. In some cases, if the address being used is incorrect, or if there is a another “primary” location in a more favorable state, discussing the ability to use these other locations with underwriters could provide access to a greater range of insurers.  
    
3. Consider Contingency and Continuity Plans. Most companies have business continuity plans – whether formal or informal. This may include alternative manufacturing facilities or secondary locations that can quickly be utilized (among others). Consider these continuity plans when calculating your potential lost income and review it against your policy’s business interruption limit. Strong continuity plans may allow companies to reduce that limit for a premium savings.
    
4. Ask for Credits: Obtaining premium decreases can sometimes be as simple as a phone call. Insurers are always looking to retain business. Underwriters don’t have direct control of premiums but they often have a certain degree of control over manual credits that can be applied. Requesting pricing relief from an insurer is a simple way to achieve premium reductions. That being said, underwriters are more likely to entertain such credits when they are requested on a scattered basis (for example, every 3-4 years) as opposed to those that are requested annually.
    
5. Negotiate Contracts: Large clients and vendors often require particularly high policy limits. For smaller brands and manufacturers, these limits may be egregious. When contracts specify such limits, insureds should attempt to negotiate decreased insurance limits.  
    
6. Consider Foreign Coverage Options: If the US company is a subsidiary of a larger foreign parent, it’s worthwhile to inquire about the ability to extend US coverage from the parent’s foreign policy. In many cases, that may be the most cost-effective route. Similarly, when the US company is more of a distributor (with the products actually being manufactured abroad), obtaining a certificate of insurance from the foreign manufacturer with proof of US coverage can also be helpful, although this may understandably be difficult to obtain.
    
7. Review The Policy’s Rate Base: Insurance policies are almost always rated off of the company’s revenue, which is audited at the end of the policy term and adjusted accordingly. Companies that have not undergone recent audits however should take a careful look at their policy’s rate base to see if it’s still adequately reflective of their current revenues. Companies that have had reductions in revenues can often achieve premium reductions by reporting the decreased revenue to their insurers, and having their rate base adjusted accordingly.
    
8. Approach the Right Markets: Approaching the right insurers is a good start, however it’s equally important to ensure that your broker is approaching the correct underwriting department. Insurers often maintain multiple departments; small business, small mid market, mid market, energy risks, alternative solutions, etc. Surprisingly, it’s not that uncommon for an account to be declined in one department where it may qualify in another, which highlights the importance of working with a broker that understands how to navigate the insurers.
    
9. Review High Risk Exposures: Some manufacturers may have a very small percentage of revenue being derived from a higher risk product which can create underwriting issues, limiting the number of carriers willing to offer terms (which can inadvertently affect pricing). In exploring creative solutions for premium reductions, such insureds can explore the formation of a separate corporation or LLC for that specific product, to separate that risk from the rest of the operation. Such an approach would allow that risk to be addressed independently and help open up the market for the bulk of the operations which could result in improved pricing.
    
10. Consider Combining Entities: Companies that maintain multiple subsidiaries, securing separate insurance for each entity, can consider consolidating all of the insurance under their parent’s policy, when able. Due to the fact that many companies have minimum premiums and due to the way insurers rate, combining all of the insurance under one entity (with multiple additional insureds) will almost always yield better pricing.
     
11. Perform a Product Liability Study: Manufacturers of highly specialized products may be able to take advantage of independent liability studies. These studies, performed by law firms, assess the frequency and severity of claims brought against manufacturers of similar products, which can be helpful to underwriters when quantifying risk. This is especially true for highly specialized products, since the insurers in question may not have enough actuarial data to adequately underwrite the risk. When such studies demonstrate less litigation than might otherwise be assumed, they can help insureds access a greater range of carriers and/or provide some premium relief.
     
12. Address the Carrier’s Concerns: An experienced broker will often engage in a deeper dialogue with the carriers in order to understand specific concerns or factors driving the premium. Understanding the underwriters concerns and being involved in those discussions can sometimes yield additional information that can ease underwriting and pricing. This may involve explaining risk controls that have been implemented post-loss, or elaborating on very specific risk controls such as those involved with the storage of any lithium batteries for example.
     
13. Explore Risk Mitigation Controls: For larger manufacturers, insurers will often perform an audit/inspection of the operations. This will often be performed after issuing, or in some cases, prior to releasing new business quotations. These inspections/audits can often contain valuable risk mitigation recommendations. In some cases, implementing additional risk mitigation controls may help in achieving premium credits.
     
14. Consider a Separate CAT Policy: Managing insurance for multiple locations can create challenges, especially for retailers with numerous locations. Securing flood and EQ coverage is one such challenge. The primary property insurer may be selective in the locations for which they agree to provide terms, and when they do, it may carry high premiums and/or higher deductibles depending on the location. While securing all coverages under one policy may be convenient, it may be more advantageous, from both a pricing and policy term perspective, to secure a separate blanket flood/EQ policy.
     
15. Implement a Formal Recall Program: Most larger manufacturers and retailers will already have formal recall programs implemented, but for smaller companies and those that don’t, it’s critical to implement a program. Failing to have recall policies in place will often result in limited access to insurers, as there are a number of insurers that require such programs in order to release policy terms.
     
16. Review The Entire Insurance Program: While product liability, property insurance and workers compensation insurance accounts for the bulk of a company’s premium, there are a number of other important coverages that product-based businesses should consider as well, such as; EPLI insurance, cargo insurance, product recall insurance, crime insurance, cyber insurance and D&O insurance. When such ancillary products have already been included within the company’s insurance program, there may be additional opportunities to reduce premiums by remarketing these as well. Additionally, a careful coverage assessment may uncover duplicative coverage, such as; EPLI endorsements on package policies when separate EPLI insurance is already in place, or social engineering endorsements on crime policies when cyber insurance policies are already inclusive of such coverage.