Finding affordable property-casualty insurance is difficult for all businesses these days. But the problem can seem insurmountable to companies that fall into hard-to-insure categories because they are start-ups or small ventures, or are domiciled in states with particularly tough insurance markets, such as Louisiana, Massachusetts, and New Jersey.
Paul Gregory, a New York City-based insurance broker turned consultant, recently set up shop in Baton Rouge, La., to help companies that either cannot find or cannot afford property-casualty coverage through the traditional method of working through an insurance broker. It's his response to a nationwide trend that's been forcing small businesses to, as he puts it, "either close down or move out of certain states."
Fortunately, small companies can aggressively take some steps on their own to avert massive rate hikes. Here's Gregory's advice:
* Get involved in the underwriting process. "I worked with a small trucking company based in Lafayette, La., that was facing a massive price increase," he recalls. "I explained to the chief executive that no insurance broker could understand his company as well as he did, so it was up to him to convince the insurance company that it was a good risk." The strategy worked: the CEO was able to tell his prospective insurer about a checklist of safety restrictions he had developed for his drivers, a new fleet-maintenance program, and various capital improvements. His insurer lowered the rate hike.
* Stress your reputation. Since start-ups have no loss record for insurers to rely on, Gregory advises CEOs to "sell prospective insurers on their own credentials within their industry." To do that, prepare a document that shows how long you've been working in the industry and details your own safety record (on everything from the products you've worked on to the cars you've driven). Then show the steps you've taken at your new company to enhance safety regulations. -- Jill Andresky Fraser