When to Move Your Insurance Portfolio from Multiple Carriers to a Program/schedule?

[Cameron Moore]

As your Portfolio grows and evolves, so too do your insurance needs. Many investors start with a variety of insurance carriers to manage different properties. While this approach works in the early stages, there comes a time when consolidating all your properties' insurance into a single, scheduled program might be more beneficial. But how do you know when to make that move? In this post, we’ll explore the key considerations and weigh the pros and cons of making the switch.

Why Investors Use Multiple Carriers in the First Place

Most businesses start with multiple insurance carriers for a few simple reasons:

1. Cost – When starting out, investors may opt for the most affordable insurance options, which often leads to picking different carriers for different coverage areas.
2. Specialization – Some carriers specialize in certain locations/aspects of the property. 
3. Flexibility – Investors at the beginning may often like the flexibility of mixing and matching coverage as their needs change or their risk profiles evolve.

While this approach works for many Investors initially, as they scale and risks become more complex, managing multiple policies and relationships can be burdensome. This is where a scheduled or program-based approach comes into play.

What Is a Scheduled Insurance Program?

In a scheduled or program-based insurance setup, you work with one carrier for all—or most—of your insurance needs. This carrier essentially underwrites a package deal tailored to your business, bundling all your policies under a single umbrella, which could include General liability, Umbrella protection, and (obviously) property. 

Now, let’s dive into the upsides and downsides of moving to this kind of arrangement.

The Upsides of Consolidating Your Insurance into One Program

1. Simplified Management Managing multiple policies with different renewal dates, coverage limits, and terms can be a logistical nightmare. A single program consolidates your policies, making renewals, premium payments, and claims management much easier to handle. One point of contact also reduces confusion and administrative burdens.
2. Comprehensive Risk Management A consolidated program allows for a more cohesive approach to risk management. Your insurer gains a better understanding of your entire risk profile, which can result in more tailored coverage. This holistic view can also help prevent gaps in coverage or unnecessary overlaps.
3. Easier Claims Process When a loss occurs, dealing with one insurer can make the claims process faster and more straightforward. You won’t have to worry about which policy or carrier covers what, reducing the chances of delays or disputes between carriers.
4. More Predictable Costs Scheduled programs often allow for more predictable budgeting. With everything under one roof, you’ll have a clearer understanding of your premium structure and less volatility in terms of price changes. In some cases, carriers might even offer multi-year rate locks, providing even more stability.

The Downsides of Consolidating Your Insurance Program

1. Reduced Competitive Pressure Having multiple carriers compete for your business can help keep premiums in check. When you move to a single carrier, you lose that competitive element, which could lead to less aggressive pricing in the long run. Additionally, you might find that the single program doesn’t offer the best rates for every line of coverage. But there are several a broker can work with. 
2. Dependency on One Carrier Relying on one insurer for your entire portfolio can create vulnerabilities. If the carrier faces financial trouble, significantly raises premiums, or changes its terms, you could find yourself with fewer options. Diversifying your risk across multiple carriers can provide a buffer against this kind of exposure.
3. Transition Time Cost and Challenges The process of transitioning from multiple carriers to one program can be complex and time-consuming. It often requires a comprehensive review of all your policies, coverage gaps, and potential overlaps. 
4. Potential for Coverage Gaps While a scheduled program can reduce coverage gaps, the transition itself may create temporary gaps if not managed carefully. It’s crucial to work closely with your broker to ensure a seamless switch, without leaving your business exposed during the process.

When Should You Consider the Switch?

Deciding when to make the move from multiple carriers to a single insurance program depends on a few factors:

• Business Growth: If your business has grown significantly and now has more complex risk needs, consolidating might make sense. The bigger and more diverse your business, the more cumbersome managing multiple policies can become.
• Administrative Burden: If managing multiple policies is consuming too much time or resources, consolidating may be a way to streamline operations and reduce the workload on your team.
• Negotiating Leverage: When your business reaches a certain size, you may have enough premium volume to negotiate better terms by consolidating with a single carrier.

Final Thoughts

Consolidating your insurance portfolio into a scheduled program can offer significant advantages in terms of cost, simplicity, and risk management. However, it’s important to weigh these benefits against potential downsides, such as loss of specialization and reduced competition. Every business is unique, so the decision should be based on your specific needs and risk profile.

Before making the switch, consult with your insurance broker to ensure that a program-based approach is right for you. With the right planning, you can create a seamless transition that provides the best possible coverage and peace of mind for your business.