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Saving Tips for Business Insurance?
curious boss asks: "I have a question for the IT manager types out there: does anyone know how much a business can save on their annual insurance premiums by having their information security policies and procedures audited once a year? How much would an audit cost? I know those are vague questions, but if there's a rule of thumb (eg, cost per server, or cost per employee), or even pointers to getting more detailed information, that would be great."
I bet your insurance agent does.
"He who would learn astronomy, and other recondite arts, let him go elsewhere. " -- John Calvin, commenting on Genesis 1
Couldn't you make this reply to just about every Ask Slashdot post? What do you think this forum is for? If we wanted to just find out some quick information we would use Google, but if we want to hear about experiences of other technical users, Ask Slashdot is a great place to find out. If you hate this idea so much, turn off the Ask section in your preferences.
Some of the highest paid careers are sales, and almost 80% of CEOs come from Sales.
Not that they're a particularly noble breed of people, but they do make teh lootz.
You better watch out, there may be dogs about . .
pretty soon you won't be able to get insurance at all without the audit.
as for the guy and his actuary comment - look, I hate insurance salesmen, too. I know too many of them. but for a business person looking for a rate quote they are a necessary evil. you can't have people calling actuaries for information, actuaries can only communicate with other actuaries.
Our insurance company has no knowledge of audits like that, whatsoever.
I don't respond to AC's.
I hear you can save a ton of money on insurance by switching to GEICO
We are required to prove we keep regular off-site backups, take laptops home at night etc along with the requirement to have a monitored alarm on the premises to even get the insurance in the first place.
I haven't heard of getting discounts for further efforts...
Mod me up, I've slammed Microsoft
Saving Tips for Business Insurance?
I suppose that's ONE way to do it... Still, I doubt you'll collect enough tips at your receptionist's desk to pay the whole insurance bill. :>
That was really helpful.
I wouldn't want to belittle the amount of study put into preparing for your actuarial exam. I also wouldn't want to put down the experience that other insurance professionals my have. It very possible that an insurance agent might be able to find a way for the insured to get lower rates by making contract changes, moving coverage, or some other change.
Also, how likely is it that an actuary is going to be the one helping an end user with their insurance cost issues? It would be like asking a senior programmer at Microsoft for help unclogging a toilet.
I'm sure at some of the more prestigious consulting houses, you will have actuarial consultants, but I would suspect that the person asking this question doesn't have access to those resources. I bet a good intern familar with this coverage would be able answer the OP's question.
The best short answer is: it depends.
For a smaller business, the audit's cost in time and resources is not likely to be worth it. It's cheaper from the insurance company's perspective to just take all the losses, divide by the number of policies, multiply by their profit margin, and that's the price. For a larger business, where the answer to the question "how secure is this company, really," the correct answer might save enough money in the long run, both for you and the insurance company, to be worth it.
Some misconceptions that need to be dealt with:
1. No two insurance policies, even with car insurance but ESPECIALLY with technology liability insurance, are the same. Different companies offer policies with widely varying terms and pricing strategies. Think about this: $25,000 might be a bargain price for a car if it's a Lexus, but not if it's a Yugo. Now substitute "insurance policy" for car in that statement. When last I checked, the main companies in terms of market share for tech liability policies are Hartford on the smaller end, and AIG on the larger end.
2. Contrary to what the actuary says, there are some highly professional, highly educated insurance agents out there. Your typical guy in a retail storefront selling Progressive or State Farm policies is not likely to be one of them, but in most larger cities there are several agencies that deal almost exclusively with insurance for businesses, employ highly qualified people, and are run like law firms. (And make a hell of a lot more doing it than the actuary says, btw.) I know because I am one of them. I have a bachelor's degree from a prestigious institution, worked on some of the coolest technology projects that were around in the late 90's, was approached about working for the CIA, owned a software company in Chicago for two years, and I got into insurance because it offers low stress, a flexible schedule and a good way to make money.
3. Premiums for larger insurance policies -- say, above $100,000 in premium -- are very negotiable. Technology liability is a very profitable line of business for most of the insurance companies that offer such coverage. Tell your agent or broker that you're interested in pursuing some kind of audit or certification in return for a break on the premium. If he gives you a blank stare, or doesn't say something like "well, let's get on the phone with the underwriter and see what's possible," get a new agent or broker that knows something about the subject.
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