Why Won’t Insurance Companies Take My Business?
You’ve got a great new idea, a great new business, and you need to place some insurance for it. Insurance brokers don’t seem to be too interested in writing your insurance. What’s that all about? Hi, I’m Jeff Gordon from Gordon Atlantic Insurance.
How Risky is Your Start-Up?
Here’s the thing: many startups don’t make it, but insurance brokers and insurance companies and agents want to develop longer-term relationships. Oftentimes, working with startups is risky.
Insurance companies will charge more for a new business because they don’t really know what they’re doing on all aspects of controlling their risk costs. So it can be expensive and it can be complicated.
How to Attract an Underwriter
Here are some of the things that you can do to make your business attractive to an underwriter.
First, show some good credentials from the principals. If there are two or three or four people that are starting this business and you’ve done other things successfully, then tell the story! Provide CVs and information about your business plan. Detailed information about a business plan is so much more effective than just saying “hey, we’ve got a great idea and we’re going to make a ton of money.”
Related: What Is a Business Owner Policy?
Truth in Advertising
If your website is up, make sure that it really tells the truth. Here’s a great story on a startup company. It was a service company that had one vehicle. We submitted it to an underwriter and the underwriter called me up and said, “hey wait a minute, you’re submitting one vehicle but this guy’s got twelve trucks on his website.”
So I went to his website, and sure enough, there’s twelve trucks. Eleven of them were photoshopped trucks. He wants to look like a big business, but the insurance underwriter is thinking “wait a minute, we’re insuring twelve trucks for the price of one.” That wasn’t the case at all.
Related: What Is Co-Insurance?
What Are Underwriters Looking For?
If you’re telling the world about what you’re doing you’re telling the underwriters too. Good underwriters are going to do their research on your startup.
Hire The Right Professional For the Job
To develop an insurance program for a startup, it’s important that you work with a professional that works with other startups who can give you other advice about managing risk beyond just transferring it through insurance. Managing risk is very important to underwriters and it makes you more attractive to underwriters to get a lower insurance rate.