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Risk Based Capital and Cheap Business Liability Insurance

Risk based capital or RBC, is used extensively in the financial services industry. When you as a small business owner are thinking about purchasing new small business insurance, you can borrow some of the technical tools that are used in calculating RBC.

  Just like in RBC where you look for opportunities for improvement. Likewise, when purchasing commercial general liability insurance coverage you can also look for opportunities for improvement. In the testing for RBC you can change the numbers to do what if scenarios. Doing what if scenarios in your insurance portfolio can also help you in predicting your total cost of insurance.

  •  First of all you will need to identify the major drivers;
  • and components which will factor into the pricing of your insurance portfolio. Such as your carrier, broker fees, sales, payrolls, and past claims.
  • Look for opportunities of improvement throughout this matrix.
  • Finally, you will be able to project the potential impact your company’s strategies will have and the affect it will have on your ability to obtain cheap business liability insurance in the market place.

 Risk based capital, RBC, protocols, can be helpful in predicting your total cost of insurance.

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