Strategic decision helps company cut its P&C insurance bill

Last updated on May 13th, 2019 at 02:41 pm

A West Milwaukee-based small-business owner was able to save potentially 30 percent on his property casualty insurance premiums, or about $40,000 a year, after entering a unique insurance benefit program with Security Insurance Services Inc. and United Heartland Inc.

Patrick Balistreri, owner of Al’s Window Cleaning and Building Services LLC, was paying about $230,000 per year for property and casualty insurance because window cleaners are part of an assigned high-risk insurance pool mandated by the state.

Companies within that pool have higher premiums, little to no service, no premium discounts and no loss dividends. They also have to pay a lot more money up front, Balistreri said.

After working with Chris Wills, an account executive with Security Insurance, and Paul Hingtgen, senior vice president of underwriting and risk management services for United Heartland, both of New Berlin, Balistreri was able to take advantage of premium discounts, better terms of payment, a loss-sensitive dividend plan and loss prevention and aggressive claims management services.

United Heartland is a mono-line, worker’s compensation company, and its method of operation is to work with companies whose worker’s compensation costs have spun out of control, Hingtgen said.

United Heartland consults with companies such as Balistreri’s firm, helping them incorporate a safe culture by training owners, managers, supervisors and employees, Hingtgen said.

Together with Security Insurance, as Al’s Window Cleaning and Building Services increases its safety record and reduces claims, the company’s experience modification, or “mod,” which insurance companies use as a scoring system on how companies are charged, will decrease, Wills said.

“This is long-term. This is not something we are going to fix in six months or a year, but I have seen where we have gotten ‘mods’ down in half,” Wills said. “They have to buy into the process and incorporate a safety culture at work. And that takes time.”

An average rating is 1, Wills said, where a company is paying exactly what it should be paying for the coverage it needs. Anything above 1 reflects bad experiences where the premium price was increased. Anything below a 1, which can be rare, is a reward for having very good experiences, meaning no claims for a long period of time.

The mod rating resets every three years, Wills said.

When Wills and Hingtgen broke down the services of Al’s Window Cleaning and Building Services, they found that close to 80 percent of Balistreri’s business consisted of work on buildings under four stories. Because Balistreri’s workers use a lift on buildings under four stories instead of being suspended by a cable attached at the top of the building, the company was eligible for voluntary insurance coverage, or standard policy coverage outside of the assigned risk pool.

Hingtgen suggested that Balistreri split his company in two to take advantage of two insurance policies.

Balistreri split apart his company into Al’s Window Cleaning and Building Services and started a new company, Al’s Window Cleaning High Rise, to handle the buildings that are four stories or higher. The split of companies is internal, so employees have separate coverage and are paid through separate billings.

Al’s Window Cleaning High Rise remains in an assigned risk pool with another insurance carrier. Balistreri did not disclose the other insurance carrier’s name.

Before splitting the companies apart, Balistreri was paying $230,000 per year for property/casualty insurance, 25 percent of which had to be paid up front, and the rest had to follow for the remaining nine months of the year.

The amount of money and the amount of stress put on the business was becoming unbearable and preventing Balistreri from being able to grow his company, both in employees and profit, he said.

Balistreri invested $1,500 in attorney’s fees to establish the second company in July. After entering a standard policy with Security Insurance and United Heartland for shorter buildings, Balistreri immediately saved $20,000 with the 10-percent premium discount. If all goes well this year and Balistreri has a low amount of claims, he may be saving about $40,000.

“We are going to save Patrick close to $40,000 or $50,000 after taxes,” Wills said. “That is $75,000 worth of window washing that can go into better equipment, new software or more employees to make the company more efficient.”

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