Don’t Make It Personal
Once upon a time, long long ago, you had no idea what risk management was.
In fact, you barely understood insurance.
You knew of insurance. It was that annoying bill you had to pay for your house or your car. You didn’t enjoy it. You didn’t analyze coverage forms. You definitely didn’t feel personally responsible for “loss prevention.” For those of us who have been in the industry for quite some time, it is hard for us to remember what it was like before we knew what we know now.
And yet, many of our business leaders have knowledge of insurance that is limited to what I have described above. You see, when most people think of insurance, they think of their first-hand experience as an individual who buys insurance. This would involve personal lines of insurance such as home, auto, renters, life, etc.
Commercial insurance is the type of insurance that businesses buy (e.g. workers’ compensation, liability, cyber, malpractice, etc). We, risk management professionals, work in the world of commercial lines of insurance, which is a very different experience compared to personal lines.
This is important for you to understand, because you may have an executive team who assumes they understand insurance, because they are familiar with personal lines. This may explain why it feels like pulling teeth to get the data you need for your annual renewal.
Your CFO will exclaim, “Why can't you just call a carrier and save 15% in 15 minutes? Why aren't you just shopping for the cheapest rate?” And you will have to explain that commercial insurance procurement does not involve taking advice from a cartoon gecko, nor does it make sense to go for the cheapest rate just because it is the cheapest.
And it’s not their fault. Insurance education is nonexistent in the wild. Insurance commercials for personal lines tell you nothing about what it is that you are purchasing or how it works. There is no mention of exclusions or endorsements. The message from insurance commercials is, “Listen, we know you gotta buy this thing. We know you don’t wanna buy this thing. But we have the thing for CHEAP. Now please laugh at our mascot and don’t think about this too hard.”
This is why continuing to educate your executive team about insurance and risk management is so important. They are not living in the world of risk the way you are. You're thinking about this stuff every day. They're only thinking about it when a claim gets big enough to attract their attention, or when your insurance renewal hits a double digit % increase.
Spell it out clearly
Personal insurance:
Millions of similar exposures
Standardized forms
Commercial insurance:
Multiple insurance program structures (self-insurance, captives, etc)
Special endorsements
Broker involvement
Underwriters review financials, safety programs, contracts
Explain tradeoffs
Higher deductibles = more risk retained
Narrower terms = uncovered exposure
Carrier instability = claim service risk
It’s your job to consistently educate them on commercial insurance topics.
Your executive team is living in a different insurance universe than you. You think in loss triangles, retention layers, and emerging exposures. They think in budgets, margins, and headlines. Your role is to bridge that gap. Otherwise, they’re going to default to their own personal insurance experience as “education”.
