PROBABLY NOT, BUT YOU SHOULD: HERE’S WHY
In today’s challenging oilfield environment, Oil & Gas service companies need to maximize every dollar of revenue in order to protect profits and remain viable. This means ensuring that every investment dollar is generating an appropriate, quantifiable return — from oilfield equipment to research and development to employees out in the field and in the office.
One area that many O&G service companies overlook when it comes to gauging return on investment is insurance and the commission dollars allocated to the insurance agent. Many O&G service companies view insurance only as a sunk cost for which they will only see a return if they have a claim. However, this is a very narrow way of looking at insurance – one that severely limits your potential return on this large and important investment.
WHAT IS YOUR RISK MANAGEMENT INVESTMENT?
About 12 cents out of every insurance premium dollar (12%) is allocated to your insurance agent in the form of commissions. Think of these commissions as your Risk Management Investment, or RMI.
So the question is: What are you receiving in return for your RMI? Very few O&G service companies have ever considered this question — much less come up with a satisfactory answer.
Well, it’s time to change the way you think about the role your insurance agency plays in your business. It’s time to demand much more in exchange for those large commission dollars (RMI). This starts with determining your own Risk Management ROI and demanding that your insurance agent show you how the investment of those commission dollars translates in to maximum ROI.
LOOKING AT INSURANCE DIFFERENTLY
At Ross & Yerger, maximizing your Risk Management ROI is at the heart of everything we do. We view insurance for O&G service companies differently than other agencies. For example, our practice is not limited to the simple practice of “quoting” insurance. More importantly, in addition to utilizing our clout in the insurance market, we work with our clients to manage the factors that determine the cost of insurance. When risk levels are lowered as the result of our services, insurance costs fall as well. If the investment of your commission dollars fails to accomplish the goal of significant risk and cost reduction, then it’s time to find a new insurance agency.
In exchange for the commission dollars (RMI) we receive, we produce a high, quantifiable ROI for our clients by providing a wealth of resources and added value at no additional cost. In no particular order, some of these resources include:
- Dedicated staff of oilfield risk management specialists
- PEC SafeLand and SafeGulf training services
- A proprietary Corporate Automobile Safety & Risk Management program
- Review and Negotiation of MSA indemnity and insurance provisions
- Cradle-to-Grave contractor management service (ISNet ®*, PEC’s SSQ, PICS, etc.)
- Written OSHA and Safety program development
- Online OSHA and Safety training programs
- OSHA 300 Recordkeeping software
- Complex Claim advocacy
- EMOD Management, Verification and Projection
In short, we are investing our commission dollars into these and other resources in order to reduce your insurance costs and increase your Risk Management ROI. This is a different way of looking at insurance: from the perspective of “how can we produce a quantifiable Risk Management ROI for our clients?” rather than “how much commission can we earn?” What is your agent’s ultimate goal?
RAISE YOUR EXPECTATIONS
As an O&G service business, you should expect a Risk Management ROI of well above 100%. Otherwise, your insurance expenditures are just sunk costs for which you are significantly overpaying.
Very few O&G service company owners have any idea what their Risk Management ROI is — and if they did know, they would be very disappointed to learn that it’s probably well below the breakeven point.
At your request, we will provide you with a no-cost, no-obligation Risk Management ROI analysis that will quantify your current Return on your commission dollar Investment. Then we’ll demonstrate how partnering with us and taking advantage of our portfolio of no-cost Risk Management services will significantly boost your Risk Management ROI and decrease future insurance costs, leading to enhanced profitability and elevated standing with your best customers.
To schedule an appointment time for your Risk Management ROI analysis, please contact Jacob Haralson at Ross & Yerger at firstname.lastname@example.org or 601-944-0961.
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