Over the past 20 years I have met many fuel dealers, from the “mom and pop” shops, to the regional dominators. No matter the size, a common, yet alarming characteristic that I have noticed is that many dealers are not leveraging their existing property risk management relationships to help them execute a solid risk management plan. These are relationships that are already accounted for in the bottom line, yet if managed properly can also help increase it!
When identifying where to leverage a company’s risk management partnerships, look no further than the insurance broker and the insurance carrier. If a company is only using their insurance broker to shop price and coverage “apples to apples,” and they are willing to move this relationship from year to year based solely on this criteria, then they are spending valuable money on an expense that they are not fully leveraging.
Experienced insurance brokers are licensed professionals with a wealth of knowledge about coverage, claims and risk management. In addition, insurance carriers spend billions of dollars on risk management, loss prevention and loss control services, and claims management. Nearly 100 percent of the time, the carrier provides these services within the cost of the policy already in place. Together, the broker and the carrier make a valuable team of risk managers for the fuel dealer, whether large or small.
How do we know this?
An insurance broker, experienced with fuel oil dealers and the industry, will know how to evaluate the dealer’s operation and match them with the most cost effective insurance program. Cost effective does not mean the cheapest price for today, but the best cost and value for the dealer over the long term. In addition, insurance brokers are responsible for servicing the dealer’s day to day insurance functions; making coverage changes and recommendations, coordinating loss control efforts with the carrier, and managing claims reviews. All of these functions are important in helping identify loss sources, managing risk and protecting assets. The main goal of the broker is to help the company control the total cost of the insurance and risk management program over the long haul. They achieve this by becoming a valued partner and consultant.
Insurance carriers value the risk management relationship greatly when underwriting a potential, or an existing fuel dealer account. The first and most important item a carrier will consider is the management of the company, their commitment to safety, and their willingness to learn and implement. This includes but is not limited to; the driver selection process, fleet safety and maintenance procedures, delivery identification methods , tank inspections during service calls, “no whistle no fill policy” and a host of other operational procedures.
Secondly, does the company properly avoid or shift risk, if it is risk that they cannot control; such as buried fill lines, wear and tear of equipment or vacancy of properties? Finally, the carrier will evaluate prior loss history, usually for a five year period. Notice that prior loss history may not be the most important consideration? This is because a risk management plan that is embraced and implemented between the company and the risk managers (broker and the carrier), should improve the loss frequency significantly going forward and for the long term.
An insurance company is far more willing to take a pricing risk on a company that they consider a partner in the risk management process. If prior loss frequency is a problem for a company, or they have simply operated on luck alone with success in the past, they are rolling the dice on the cost stability of their insurance and risk management program, which could eventually erode the bottom line. The company that recognizes the value of risk management and safety partnering will likely limit loss frequency and achieve cost stability in all financial markets. They will ultimately have less lost time and better production from employees, less third party property damage and bodily injury loss frequency and ultimately a better plan for the long term stability of their company’s program.
About the author
Vincent Franco is an insurance professional with over 20 years experience working with energy related companies; specifically fuel oil dealers. He is currently a partner in Capacity Group of NY, LLC located in Westbury, NY., which handles 45 oil dealers in the NY Tri-State area. Vincent Franco can be reached at 516.280.7710 or email@example.com