Do you get cold calls from insurance agents wanting to help you save money? How many times do you just say, "No thanks. I'm happy with my current broker"?

Studies of the insurance industry indicate that at any given time only about 3% of companies are unhappy with their insurance agents. That means that all the insurance agents who want to expand their book of business have to constantly look for those 3% of companies who are ready to make a change.

The sad fact is that most of the remaining 97% of companies could probably decrease their business insurance premiums by up to 10%. That 10% savings is an average. A small percentage of companies are already getting the best deal possible. I have only rarely seen insurance carriers decline to compete with existing policies.

While you may be happy with your current broker, rest assured your current broker is ecstatic with you. You represent money in the bank to him. He may even be charging you additional "placement fees" on top of earning a standard 5-10% commission. If you agreed to the fees in the first place, cool. But some agents become so complacent they just start increasing costs for their long-time customers.

The worst possible way of reducing your insurance costs is to ask 2 or more agents to compete for your business. Unlike manufacturers or distributors who can reduce costs and offer discounts, insurance agents don't have much wiggle room on price. All they can do is cut their commissions. While that may seem okay to you, what you really want is for the agents to reduce the total premiums.

Do the math. If you're paying $250,000 a year on business insurance, would you rather save $25,000 (10% of the premium) or just part of $25,000 (the agent's commission less whatever he is willing to give up)? If you take the 10% premium reduction, the agent automatically gives up 10% of his premium, which is equivalent to only 1% of your overall cost. By working with the agent, you save more money but he doesn't lose nearly as much commission.

That's a win-win scenario.

When you send 2 or more agents out to get quotes, they immediately lose their ability to negotiate on your behalf with the entire insurance market. They cannot leverage the various underwriters against each other. Like it or not, you are in no position to negotiate for the best deal. You may think you are, but you're not. Agents are at their most effective when they can work with all the markets available to them.

Now, the second worst possible way of reducing your insurance costs is to assume that the broker you've been using for 10, 20, or 30 years is getting you the best possible deals. Long-time brokerage relationships usually occur between friends and relatives. The only way to check their work is to give 1 other agent or broker free rein every 2-3 years. And then you should take the better deal, because your friend or relative will get the wake up call and come back with a great deal the next year.

Companies often hold back information when they ask new agents to quote for them. They wrongly believe the agents can compete simply by trimming their commissions. In fact, when you refuse to disclose information, the underwriters that the agents work with pad their premium estimates. You automatically increase your premium by keeping your secrets.

Even your current agent cannot get you a reduction in premium if you expect him to use the same information year after year. Sure, you provide financials at audit time and your agent knows your current premium. But there is a lot more information that goes into getting the best possible premium for General Liability, Professional Liability, and Products Liability. When underwriters see incomplete submissions, they do one of two things: they either close the book and work on something else or they just assume the worst possible scenario and figure a higher premium.

So when your trusted agent comes back with 3 quotes and 4 declines, remind yourself that you could have gotten 6-7 quotes if you had just provided full information on a timely basis. And the odds are pretty good that your quotes would be 3-15% lower than what you see if you gave the underwriters what they asked for.

The flexibility is really with the underwriters, who have to estimate how much risk of loss your company is incurring. When the underwriters are kept in the dark, they either assume the worst possible risks on your behalf, or they just refuse to quote for you. Many agents send submissions to 6-10 markets and consider themselves lucky to get 2-3 actual quotes.

Can every agent leverage the market for you? Probably not. Many agents lack the experience or the incentive to do that. Successful agents with happy clients, if they do their own market submissions, often don't engage in full market research. They don't leverage their relationships with underwriters to get them to compete for your business. In fact, many agents just let your carrier renew you automatically, investing a minimum of effort in finding better deals for you.

It's important that you talk to a new agent every 1-2 years. Pick one who demonstrates a reach into the markets for each of your coverages. Ask them, "If I were to let you exclusively quote on my coverages, how many markets would you negotiate with? If I give you all the information you need, how much information will you ask for?"

Ignore any agent who names fewer than 5 markets for General Liability or Products or Professional Liability, unless all the agents you talk to name the same handful of markets.

Ignore any agent who says, "I won't ask you for much information".

If an agent says, "We work with 1,000 markets", ask him to give you a list of 10. Give him 24-72 hours to give you a list. Many agents, when they are cold-calling, are not able to give you a reasonable list of markets on the spot. They should be able to, but each industry has its own set of carriers. Some industries have many carriers, other industries have more.

Ask that cold-calling agent to send you a fax listing the carriers he can quote with for each type of coverage you carry. Ask him to provide A.M. Best ratings for those carriers. A- or higher rated companies are the most financially stable. You commit yourself to nothing by getting a 1-2 page fax listing carriers. The agent should ideally keep that information handy anyway.

When you make the decision to test a new agent's ability to work for you, give that agent letters of authorization to request loss runs (claims history) for the past five years directly from your insurance carriers. If you go ask your current agent or broker for the information, they will delay sending you the information long enough for them to go get quotes from their best markets. While you may feel this is in your best interest, it's not.

Your current agent has the opportunity every year at your renewal time to seek out the best deals possible for you. If he isn't negotiating with the underwriters to the best of his ability for you, he's had his chance. Let him compete on the competence of the other agent you're talking to. This is your bottom line. Find out how much that long-term relationship is really costing you.

Let the new agent get the loss runs. It commits you to nothing, but it gives him the flexibility to seriously negotiate with any underwriters who may be interested in acquiring new customers.

And let that new agent look at your policies. Show them the premium. Underwriters usually increase premium estimates when they don't know how much you're paying for current insurance. No one increases their premium just because they know you're paying X. You've already charged them to reduce your premium by up to 10%. They won't get your business if they cannot save you 10%.

That's the only real flexibility you have when dealing with insurance agents. Tell them, "I pay $500,000 for insurance. If you can save me $50,000 and keep or improve my coverages, I'll give you my business."

Maybe they can save you more than $50,000. Maybe they can save $100,000. You won't know for sure, but you'll either get your 10% savings or you'll know that -- for now -- your current agent is doing as good a job as anyone else. And that is worth a lot of money in my book.