SAN ANTONIO-When it comes to cutting the cost of insurance, credit unions may want to take Smokey Robinson's mother's advice: you better shop around.
Many CUs are already doing just that, according to Joy Larson, VP-operations at SWBC Insurance Services, who observed, "We are seeing credit unions shop their insurance more." But as credit unions seek to cut insurance-related expenses, they also are being advised to do so with eyes wide open. "In our industry we can be viewed as insurance salespeople, but we do not take that approach," said Nick Grant, CEO of SWBC Insurance Services' property and casualty division. "We want to be advisors, making our customers fully aware of their exposure so credit unions can make an educated business decision about their coverage."
The most basic way to reduce insurance costs is to "self insure," increasing the amount of the deductible in order to decrease the premium. The problem with that strategy, of course, is that in the event of a claim or claims being filed, the credit union can end up losing more money than was saved. "When CUs seek cost savings in their insurance, they tend to think in terms of reducing their price or their premium," explained Brett Morgan, SWBC Insurance Services SVP. "What they ought to be thinking about is reducing the overall cost of insurance, and that includes reducing their losses, reducing their claims."
For example, just making sure that an office is set up in an ergonomically correct way can help cut claims. "We have some who have consistently had losses, and there is a lot they can do to solidify their costs by better loss control," Morgan offered.
One piece of good news: most carriers are doing their best to keep insurance costs down. "They're operating in a soft market, and credit unions can be the beneficiary of that," Grant suggested. "We're seeing premiums renewed with little or no changes. Carriers are not stepping up their premiums right now."
CUs that are price-shopping are also being encouraged to ensure they work with carriers who understand the credit union model and are financially strong themselves, Grant commented. "We make sure we are marketing to financial strong carriers," he said. "Sure, the carrier with a lower rating might offer a lower price, but you want to be with a strong, stable carrier. The only thing worse than a claim is a claim denied."
