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Saving Tips for Business Insurance?

Cliff posted more than 8 years ago | from the things-you-can-do-to-keep-costs-down dept.

29

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."

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29 comments

Good News Everyone! (-1, Troll)

heauxmeaux (869966) | more than 8 years ago | (#14911439)

My Balls are on fire!

Can I cool them off in your mouth?

Ask Slashdot? (-1, Flamebait)

Anonymous Coward | more than 8 years ago | (#14911553)

Since when has Ask Slashdot been for lazy people to ask others to do their jobs for them?

If you think you might be able to save your company some money on insurance, then DO A LITTLE RESEARCH YOURSELF and find out if it's feasible. Don't ask slashdot regulars to do all the work for you, when obviously it will be only you who gets credit from your bosses for the idea.

Re:Ask Slashdot? (2, Insightful)

Anonymous Coward | more than 8 years ago | (#14911637)

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.

I don't know, but... (3, Informative)

Fished (574624) | more than 8 years ago | (#14911555)

I bet your insurance agent does.

Re:I don't know, but... (4, Insightful)

Anonymous Coward | more than 8 years ago | (#14911591)

That's a strange answer. Why would you make that wild-ass claim? Ever talked to an insurance agent that had a clue as to how the actuaries created the rate tables? For my actuary test, I've completed more than twenty times the amount of study that the ridiculously easy CPA test requires. To sell insurance you can be even more of a complete uneducated idiot than a CPA. Those idiots have no clue how us actuaries create the rate tables. That's why the morons that sell insurance make $20k or less per year plus commission, while an actuary that's passed all of the tests averages more than $193k per year.

You really need to talk to someone that knows something about insurance. An insurance agent knows nearly nothing about the business. That's like asking the janitor at Microsoft for help programming. It's a completely idiotic statement.

Re:I don't know, but... (4, Insightful)

Fished (574624) | more than 8 years ago | (#14911671)

Uh huh. But the answer this guy needs could come straight of the table.

Re:I don't know, but... (2, Interesting)

Miaowara_Tomokato (757775) | more than 8 years ago | (#14912279)

From my experience, the simplest route for this guy is to speak with an adjuster at the company providing insurance- not a salesperson or an actuary. No doubt an actuary could give him a very detailed description of it how it all ends up, but he just wants to know what saves a couple bucks. The adjuster will have the ability to run the numbers a variety of ways to see what trims off a few dollars.

Simple answer: anything you can do to make your business safer (in any way) will save money.

Some examples:Choose a location close to a fire station, limit your exterior signage, don't sell something that a kid might choke on, try to work from a newer building, use an alarm system, keep cracks under control on the sidewalk outside your location. Odds are good that if an action reduces the chances of a fire, theft, or lawsuit, then it will be reflected in your insurance costs.

Re:I don't know, but... (1)

NateTech (50881) | more than 8 years ago | (#14921873)

And how would he reach the adjuster...? He'd call his agent.

another idiotic statement (1)

BitterAndDrunk (799378) | more than 8 years ago | (#14911719)

Is the implication that insurance salesmen make peanuts because their base is 20k/yr. The + commission is a pretty important piece of the sales puzzle, as anyone reasonably competent in math should know.

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.

Re:another idiotic statement (0)

Anonymous Coward | more than 8 years ago | (#14912056)

Their pay scale speaks volumes about their ability to convince people to buy something, less about their knowledge of the product. Do you go to best buy to learn about computers from the kid who sells them? Do you go to the Chevy dealer to discuss the finer points of engine design with the salespeople?

Well, maybe you do, but most likely you'll find the conversation lacking ;)

Re:I don't know, but... (1)

HardCase (14757) | more than 8 years ago | (#14911986)

That's why the morons that sell insurance make $20k or less per year plus commission...

Spoken like someone who has absolutely no idea of just how much of his first-year premium goes to commissions. And also has absolutely no idea of the power of residuals.

-h-

Re:I don't know, but... (0)

Anonymous Coward | more than 8 years ago | (#14913110)

And we wonder why actuaries are seen as arrogant and socially incompetent. I'm an actuary; I've passed all the exams; but I have no clue how to effectively design a business insurance product to meet a specific client's needs.

The best person to talk to would be an underwriter who knows the industry. He will know how much audits cost, and how they affect the charged rate--the client only cares what they will be charged, not how it was developed.

Finally, good luck finding an actuary who is willing to sit down with an individual client, examine their risks, explain the rating table, tell them how much an audit costs... Noone cares how much you make or how hard you studied if you can't help them.

Re:I don't know, but... (0)

Anonymous Coward | more than 8 years ago | (#14913527)

Sir,
My father is an insurance agent and I can assure you that insurance agents can make an excellent living. While I do have a great deal of respect for actuaries, he makes in the deep six figures and that is not at all uncommon.

Re:I don't know, but... (0)

Anonymous Coward | more than 8 years ago | (#14913713)

You must be new to the insurance business with a comment like that. I am currently an actuary for commercial products (business insurance) and before that I was a commercial underwriter. While the actuaries make the tables and develop the rates, the underwriters determie the final rates for individual businesses, and hence the total premium or savings, all the agents or brokers do is sell the final product.

To answer the thread, in order to save money on the business insurance with internal audits, you would have to show that there was some risk mitigation factor, (we call it risk managment or loss control), that would reduce the probability of a loss (ether partial or total), also, with data centres, generally the greatest loss potential would be for business interruption insurance, which in most cases exceeds the direct damage amounts. You would need to be able to show that the down time would be minimized in both total and partial losses, and that your standards are better than the percieved industry average, because with most hi-tech companies, the underwriter's and actuaries only have 5 to 10 years of data to base their stats on and the trends are not very accurate yet.

Hope this helps.

Nick Burns, your company's actuary... (1)

mattegger (265484) | more than 8 years ago | (#14915331)

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.

Re:I don't know, but... (0)

Anonymous Coward | more than 8 years ago | (#14915596)

Ever talked to an insurance agent that had a clue as to how the actuaries created the rate tables?
...and...
An insurance agent knows nearly nothing about the business.
That's why you go with a broker, not an agent. A broker works for the insured; an agent works for the insurer.

(Why yes, I work in IT for an insurance brokerage.)

Microsoft Free Zone (2, Funny)

tengu1sd (797240) | more than 8 years ago | (#14912026)

If I adopt a Microsoft free zone on my network, does that give a me a discount and SOX compliance?


Mod me up, I've slammed Microsoft

The way things are going... (2, Insightful)

acvh (120205) | more than 8 years ago | (#14911720)

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.

Re:The way things are going... (1)

Tumbleweed (3706) | more than 8 years ago | (#14912199)

actuaries can only communicate with other actuaries

Wow - that sounds like a good security feature to implement on the network!

-zero- (1)

DogDude (805747) | more than 8 years ago | (#14911846)

Our insurance company has no knowledge of audits like that, whatsoever.

I will do it for free (0)

Anonymous Coward | more than 8 years ago | (#14911872)

Osama bin Laden

YMMV, but... (3, Funny)

Anonymous Coward | more than 8 years ago | (#14911950)

I hear you can save a ton of money on insurance by switching to GEICO

Re:YMMV, but... (1)

karnal (22275) | more than 8 years ago | (#14912179)

YES!!! You can do iiiit!!!!

Can't get insurance without some items in place... (1)

karlto (883425) | more than 8 years ago | (#14912007)

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...

Insurance is a ripoff (0)

Anonymous Coward | more than 8 years ago | (#14912711)

You can save 100% by not having it.

The point of having a company is that if the worst happens financially, you only loose your stock and a job. If you own your own business as an individual, you can loose your house and everything you own.

If the corporate sheild is not enough security for you, and you need insurance to further guantee not just that you get a regular paycheck but that you don't have to get the twitchies about not having a regular paycheck, you should just turn in your American passport now and sign up for a nice, predictable, life long job in a North Korean coal mine.

Cause with the debt we have and the shit we are in, we don't need people like you.

Part time! (0)

Anonymous Coward | more than 8 years ago | (#14913013)

Hire everyone as part time muahahaha
http://www.myspacegrill.com/ [myspacegrill.com]

Some Title! (1)

martyb (196687) | more than 8 years ago | (#14913434)

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. :>

from an insurance agent (1)

awb131 (159522) | more than 8 years ago | (#14916095)

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.

[Plug] If you're in Missouri or Illinois, call me. [/Plug]

Re:from an insurance agent (1)

bill_mcgonigle (4333) | more than 8 years ago | (#14919138)

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.

FWIW, I tried Hartford last month and they said they weren't writing for small businesses anymore.
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