Accident-free environment leads to competitive insurance premiums

I started selling insurance to propane marketers in the 1970s, and I’m still at it.

In addition to making me old, it verifies my experience and qualification to comment about the current states of affairs related to past programs and the cost of liability insurance for the propane industry.

Looking back, the insurance industry has had its ups and downs, and the past is littered with insurance companies that failed to make a profit insuring propane marketers.

I remember bringing in a new carrier in the 1970s to counter the lack of competition in the propane insurance marketplace. Actually, as opposed to the numerous options today, there were very few markets back then and the field could get heavy-handed.

We successfully took business away from those markets and gave our customers price discounts that enticed them to make a change. We ended up adding a number of new accounts to our agency and, in fact, it did send a message to those markets that may have had their thumb on the scale. I say “may” have had their thumb on the scale, because actual profitability resides in the eye of the achiever, not the optimistic beholder.

My new carrier got out of the business in a few short years, and we had to replace the coverage with other carriers. What I learned from that experience is that all new players in the propane insurance marketplace are there for one reason: To take your premium dollars and make a profit.

Of course, it was easier back when insurance companies earned high returns on their investment income and could stretch out claims payments. From the outside, it looked like a cash cow. With today’s limited investment income, insurance carriers are forced to live with actual loss experience without the cushion of investment income.

In truth, the past 40 years have left numerous insurance companies reeling from their search for profitability in the propane insurance marketplace. High-profile, nationally recognized carriers have gotten in and out of the business based on their experience and the effectiveness of their loss-control efforts.

The industry has survived the failures of risk retention groups whose marketing cry was, “Are you fed up with having no choice?”

Other new ventures have failed as well, including the National Propane Gas Association’s much-touted affinity program, which recently lost its market due to inexperience and underpricing.

Over the past few years, many captive-type programs have blossomed targeting larger propane companies while offering the incentive of being partners in the process. Some of these programs are still viable, while others are desperately looking for new business to keep the program afloat.

The recent insurance carrier failures have left many marketers scrambling for legitimate coverage and a safe harbor. In some cases, marketers had to leave their paid premiums on the table and cough up new premiums. In most cases, marketers were able to get competitive replacement coverage from the numerous insurance providers that have long been members and supporters of the propane industry.

I share this information to help you make informed choices when selecting an insurance carrier. Price alone is a bad reason to switch insurance companies.

Do not count on a new market to save your insurance interests. The best way to keep your insurance premiums competitive is to make a solid effort in creating an accident-free environment for your employees and customers.

Take responsibility for your own results rather than count on an outside sales force that has dollar signs in their eyes. All legitimate insurance carriers offer comprehensive loss-control assistance designed to help you achieve profitable results.

All legitimate agents assist with claims management, review exposures every year and make adjustments based on changes, losses experienced and profitability. They also go to bat for you when you need objective consideration with coverage or a claim.

The bottom line is: If it’s not broken, don’t try to fix it based on someone else’s needs. Insurance safety is not that complicated if you keep your eyes on the real numbers.

Jay Johnston (www.thesafetyleader.com) is an independent insurance agent, business consultant and safety leadership coach and speaker. Contact him at 952-935-5350 or jay@thesafetyleader.com.