XDATEs and Breakin the Contract? (Commercial)

Mike Siegal

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Hi friends,

A friend of mine was talking about breaking xdates on commercial insurance (w/c,gl,etc) to gain the BOR immediately (rather than wait). Apparently there is an immediate audit that would be needed.

  1. How difficult is it to get a comm.client to change midway through his policy?
  2. How difficult (co$t) is an audit? (guess that would depend on size)
  3. What pains does the client have to go through to change mid-way through his policy?

Anyway, (questions from a newby). Thanks for your constructive input...
 
You need to be a bit more specific with your question.

BOR change: they hate their agent and want to fire them, but want to keep current carrier. Most carriers will not accept or recognize a mid term BOR. Usually they require new applications and only at renewal, the policy is transferred to new agency. In the meantime, new agency may or may not be able to service the account and will not see any $ until the policy renews.

Mid Term Cancelation: It is rarely in the best interest of the insured to recommend mid term cancelation for commercial lines. Most carriers will impose a 'short' rate penalty or minimum earned % that can easily offset some if not all the savings from switching. There needs to be a good reason: getting them out of assigned risk work comp, for example.

Audits: Carriers have the right to audit, even if for a short term. There is not a cost to the insured except internally to provide the numbers. Companies will apply their own numbers if the insured refuses or does not cooperate with the audit.

Why is your insurance solution so much better than the current? Are your exposures the same? Are your forms better or the same?

Insured's that are so willing to change mid term to you, will be just as willing to change mid term to the next guy.

Good Selling.
 
Exactly what AZDave said.

Companies don't normally just randomly change brokers. If you submit a lot of broker changes, the carrier will pull the plug on you anyway. They don't like stepping on the agents toes and REALLY don't like policy theft. At the same time, they do understand in some situations, it is the best interest of the client, so it is allowed.

If you try to grow your agency via BOR's, you'll have a short lived agency. Not a viable marketing plan.

If you think companies will line up to sign the papers, you will see otherwise. Some will, if they get something out of it. Its a PAIN for the client though and they simply won't save any premium dollars because of a BOR.

Also, BOR's can (and frequently do) cause a re-underwriting of the risk. This can cause a premium INCREASE or worse, a policy cancellation.

Tread lightly.

Dan
 
Thanks guys,

(i was just asking and thanks for responding) and appreciate the WARNING.

POINT: Why would a client change mid-way? (maybe they were classified wrong, maybe the sic code was wrong, maybe their risk is not as great as thought, maybe a new carrier is in the market).

CONCLUSION: So xdates are the time to compete for comm. clients (sounds like)? And off xdates are a no-no???

.
 
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Thanks guys,

(i was just asking and thanks for responding) and appreciate the WARNING.

POINT: Why would a client change mid-way? (maybe they were classified wrong, maybe the sic code was wrong, maybe their risk is not as great as thought, maybe a new carrier is in the market).

CONCLUSION: So xdates are the time to compete for comm. clients (sounds like)? And off xdates are a no-no???

.
Well now we're putting words in Dave and DJ's posts. Let me try and help point you to what you can do.

-6 months out, start showing up once a month with donuts or whatever, just start forming a relationship with the owner/decision maker. About 60-90 days out you can start taking an application and actually block out some of the market so you will have a major inside track in acquiring a new client.

-I admire your reasons for wanting to help SBO types out mid stream, the best thing you can do is continue to pound/apply pressure to whatever open wounds you unearth in conversation when you first meet these folks. It's OK to listen to them bleed for a few minutes and then have a story that you can relate to what they are discussing.

Your tenacity or ability to think outside the box just needs to be redirected to positive things you can do to lay the groundwork and ultimately acquire them as a new client. Nobody is trying to curtail your energy or efforts, just make sure you do it the right way. You don't have to do what everyone else is doing but just physically going out and canvassing an area will put you way ahead of others.

I applaud your energy, focus in on how to use it in the best way. Good luck!!!
 
I actually think your on the right track. Quoting midterm can be very effective if you do it properly. You have 2 MAJOR advantages. First, you get the current policy and pricing up front. The current price cannot be changed midterm so you know what you are aiming for. Second, you have the marketplace all to yourself which will help you in becoming more competitive.
However, the most important thing to consider is the effect that changing the X-Date on the WC may have on the insured. In my experience it is rarely good to add the additional year to the EMR. I would quote all lines but then only bind the GL, Auto & UM. BOR the WC and explain. If you want to talk further feel free to message me. Good Luck
 
Why would a client change mid-term?? That's the question you need to answer. My guess is that any carrier you approach has seen the app before and knows the account. They've either passed, or named their price. SO, again, WHY? Why now? That has to be a darn good answer.

My experience is that most CL clients have their insurance Xdate coincide with their fiscal year. Makes that audit process a whole lot easier too. An audit is a condition of the policy whether it's done at a renewal date or a cancellation date.

Barring any reason that appeals to an UW, I'd say plant your seeds with the client and your underwriters, and work your special magic.

Good Luck!
 
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