Case 2: Selling a Computer and Liability Insurance Bundle

Case Background

A client's insurance account looks stable. Your team currently provides 30% of their PDBI insurance. This covers damage to their buildings and losses if their business has to shut down. 

Note: The team does not usually take partial shares of EC insurance (which covers worker injuries). EC is typically written at 100%.

The broker has concerns about the client's Computer policy. This policy covers things like data loss or equipment failure. The money lost has been small. But there have been many small claims. This has created extra work and problems with the current insurer.

At the same time, the client needs CGL insurance (which covers accidents or injuries to the public). This gives you a chance to fix the whole account. The broker wants a solution for the Computer policy. But they don't want to make the client pay very high deductibles. Deductibles are the amount paid before insurance starts. They also need a quick answer.

Your solution is to offer a bundled deal. You would give a good price on the CGL insurance. In return, the client gives you a share of the Computer policy. To manage the many small claims, you would start a frequency control program. This is a plan to reduce the number of small claims. It includes steps like:

  • Better equipment care

  • Using only approved repair shops

  • Higher deductibles for certain types of claims

This program must start within 60-90 days. This timeline is important. It shows the client you are serious about fixing the problem quickly.

This deal gives the client one insurer for both policies. It also gives them a better total price. It gives the broker a simple package to show the client. For you, it's a chance to get more business without taking on too much risk.

Role A — Underwriter

Goals

  • Win 100% of the CGL insurance at a good price.

  • Take on about 30% of the Computer policy. Manage the high number of small claims.

  • Make the total account more profitable. Use a bundled price, not discounts on each policy.

Levers (Your Negotiation Tools)

Levers are the tools you can use during a negotiation.

  • Bundle Pricing: Offer a better price on CGL insurance. But only if the client also gives you part of their Computer policy.

  • Frequency Controls for the Computer Policy: To reduce small claims, you can:

    • Ask for higher deductibles. The client pays more on each claim before insurance pays.

    • Set sublimits. These are lower limits on how much the policy will pay for certain problems.

    • Require warranties. The client must promise to meet certain safety or care standards.

    • Require approved vendors. The client must use specific repair shops to control costs.

  • Better Service & Support: You can offer:

    • Risk Engineering: Send safety experts to help the client find and reduce risks.

    • Priority Claims Handling: Handle their claims faster than usual.

    • Data Reporting Schedule: Set up regular times for the client to report problems. This helps you spot patterns.

  • Policy Structure & Terms: You can adjust:

    • Term Length: Set how long the policy lasts (e.g., one year, three years).

    • Audit or "True-Up": Include a process to check the client's actual risk during the year. Change the price if needed.

    • Performance Triggers: Create rules that start a policy review. For example, if the loss ratio goes too high, you can review the price or deductible mid-term. Loss ratio means the amount of claims paid compared to the amount of premiums collected.

Constraints

  • You have limits on how many small claims you can accept.

  • There is a lowest deductible you must require.

  • There is a highest discount you can offer on the bundle.