Just because you understand the total cost of risk doesn’t mean that your clients and prospects do. There are several things you need to do
Overcoming Objections – I’m Happy With What I’m Paying
Look, I love it when people tell me they’re happy with what they’re paying for insurance. That tells me they don’t understand their total cost of risk. If you let that objection get in your way, you got a lot to learn and a long way to go.
Another objection that you may get when you’re reaching out to new prospects is, “I’m happy with what I’m paying right now.” Really? Are you? Let me ask you a question. Has anybody ever come in and done a total cost of risk calculation for your organization? Oh, no, they haven’t?
Identify the Problems
See, this is a common trap that we find many business owners and decision-makers get into because they’re focused on the premium. They concentrate on the price of a product, and they don’t realize the actual problem. When we engage with a company, we come in, and we do a calculation for the total cost of risk, and that includes many things that you don’t even realize are leaking from your financial statements right now. Just a quick example for you is indirect costs to claims. Did you know that the Bureau of Labor Statistics says that for every dollar spent on direct costs inside of a worker’s compensation claim, that the indirect costs associated with that claim across the general industry nationwide is between two and 20 times the direct cost?
Move the Conversation From Premium
So you might be entirely happy with your premium. Quite honestly, in a guaranteed cost workers’ compensation program, that would make sense. You don’t feel the pain of claims until your mod goes up, and then subsequently, you get a Consent to Rate, or you get a debited rate, depending on what state you’re in, as a result of your performance. See, there’s a lag there. One of the things that you gain by being proactive and focusing on the total cost of risk is that you’re looking at way more than just what you’re paying in insurance premiums. Insurance premium is undoubtedly important, and it’s certainly a component of the total cost of risk, but it’s only one of five things that affect that. And if you only focus on one of five, which is 20% of the calculation, you’re missing out on 80%. Flip the script.
Defer the Insurance Conversation
I’d love to have the opportunity to come in and talk to you about the other 80%. We can talk about insurance later. I’m not an insurance salesman; I’m a risk manager. I would highly recommend that if you’ve not had this done in the past, we spend 20, 30 minutes talking about it. And I can assure you; you’re going to see things that you didn’t realize were happening. It’s just the nature of the beast. It’s what we do.
Yes, I realize my message is different. Yes, I know you’re used to people coming in and selling you something or trying to sell you something. And yes, I realize that you’ve already in your mind lumped me into that same category, assuming that’s what I’m going to do. It’s not. That’s not how we operate. You have my word that I’m not going to try and sell you anything. I’m merely asking for 30 minutes of your time to show you why you shouldn’t be happy with what you’re currently paying right now.