Question

Beto is risk manager for Community Coffee Inc. he feels that it is time to perform and insurance provider selection process (Don’t need explanation just answer)

1. open bidding is an insurance selection method that he knows really works well identify and describe the other 3 insurance provider selection methods

2. Beto knows that one of the considerations in insurance providers selection is the location of their offices. identify three other considerations

Answer 1

Assessing an insurer's financial health is relatively easy since rating agencies have done the number crunching for you. These firms include A.M. Best, Standard and Poor's, Moody's, Fitch, and Weiss Ratings. Each company develops insurer ratings using different criteria. Consequently, an insurer may be rated highly by one agency but not so highly by another. For this reason, it's a good idea to consider ratings from multiple agencies when assessing an insurer.

State License

Insurers must be licensed in all states in which they sell policies. The only exception is non-admitted insurers (also called excess and surplus lines insurers), which specialize in insuring high-hazard or unusual risks.

Distribution Method

Insurers use a variety of methods to distribute their products. Some sell policies through independent agents while others use captive agents. Some insurers sell their products directly to buyers without using agents. Others use a combination of methods, selling some products directly and some through agents.

Service

Service refers to the speed, accuracy, and courtesy an insurer displays when it responds to customers' requests. As the following example demonstrates, services is important when you need something right away.

Busy eventually cancels Elite's contract and hires another electrical contractor.

Some insurers provide better service than others. If you have enlisted an independent agent to obtain quotes on your behalf from several insurers, your agent should know which insurer provides the best service.

Claim Handling

As a policyholder, you expect your insurer to promptly pay any valid claim you file. Nevertheless, some insurers have a better reputation than others when it comes to handling claims. If an independent agent is obtaining quotes on your behalf, ask him or her about the insurers' claim handling practices.

Coverages

The coverages you need depend on the nature and size of your business. Some insurers provide basic "vanilla" coverages that most businesses need like commercial auto and general liability insurance.

Cost

The cost of an insurance policy can vary widely from one insurer to another. There are a number of factors that affect the policy premium.

Overall Satisfaction

Satisfaction reflects an insurer's success (or failure) to meet the needs of policyholders. Insurance buyers can assess insurers' ability to satisfy policyholders by reviewing satisfaction reports