I started as an insurance agent years ago and later went into risk control. What would have been different if it was the other way around? What if I had gone into risk control and then become an agent? What had I learned as a risk control consultant that I could have used as an agent? The first thing that comes to mind is how much better I would have been at writing a good description of operations. If you are an insurance agent, you understand the critical role of a well-crafted description of operations in getting an underwriter’s attention. If you are a business owner, ask your insurance agent about the narrative they include when submitting your application for a quote. A good description of operations should highlight proactive risk management and make a strong case to underwriters that you are indeed a good risk. Here is the list of 13 items I would include to write a powerful description of operations that gets an underwriter’s attention. You will want to customize your description of operations according to the industry and the insurance coverages being sought. 

1. Operational Details:

Start with the basics. What’s the industry, and number of years in business? What are the typical operating hours? Are there multiple locations? This information sets the stage for the underwriter.

2. Business Structure and History:

What is the business’s structure? Is it a Sole Proprietorship, LLC, S-Corp, C-Corp, or some other legal structure? Highlight any significant changes or milestones in the business since its inception. This could include acquisitions, expansions, changes in ownership, shifts in market focus, or technological advancements. This information provides the underwriter with deeper insights into the business. 

3. Workforce Data:

Highlight the number of employees, including a breakdown of roles. Include management, full-time, part-time, contractors, and temps. Are there multiple shifts? What is the average experience of the workforce? This information is more than just facts and figures; it reflects the scale of operations and potential risk factors related to workforce management.

4. Products and Services:

Clearly define what the business offers, focusing on the unique aspects of products or services. Describe the process from beginning to end, from raw materials to finished output, and finally, how it is sold. If it is a service business or has a service element, what specific services are offered? List them. Who are the customers? Is there potential liability? For example, are there airplane or AR15 parts being manufactured? Are all products produced and services provided by employees? Is any part of the business sub-contracted? What is the vetting process for vendors? Are certificates of insurance being collected? What are those requirements? This clarity helps underwriters assess the specific risks associated with the business’s offerings.

5. Risk Identification and Mitigation:

Mention any proactive measures. Are there frequent inspections? Is the building equipped with alarms, or is there a security service? Are there third-party audits or assessments? This indicates that the business is mitigating its risk proactively.

6. Claims Response:

Utilizing loss runs (claims history), provide an overview of how the company has responded to frequent or severe claims. Outline any control measures implemented to prevent future occurrences. The company’s claims response procedures highlight a commitment to good risk management practices and continuous improvement.

7. Certifications:

Include a summary highlighting how your client stands out. Has their company earned any certifications for quality or safety? Does their team have any certifications, licenses, or special training? I would highlight all of these.

8. Proactive Risk Management:

Describe the internal processes for identifying and mitigating risks. Is there a Risk Manager or someone with experience in that role? This adds a layer of credibility and demonstrates the business’s commitment to managing its risk proactively.

9. Technology Utilization:

Detail the use of technology in operations and risk management. Modern technology can significantly reduce risks, and showcasing this aspect can positively influence the underwriter’s perception of the company’s risk profile.

10. Training and Safety Programs:

Highlight ongoing employee training programs or safety initiatives. These programs indicate a proactive approach to safety, emphasizing the company’s efforts to prevent accidents and ensure a safe working environment.

11. Financial Stability:

If relevant, mention the company’s financial health, including the last three years’ revenues, emphasizing stability and growth. A stable financial background suggests a lower risk, making the company a more attractive prospect for insurers.

12. Strategic Plans for Risk Reduction:

Outline future plans for reducing risks. This forward-looking approach is attractive to underwriters, signaling a business that’s not just reacting to challenges but anticipating and preparing for them. A good example would be a manufacturing facility planning for investments in safer machinery or specialized employee safety training programs.

13. Bonus:

Shortcut! Use AI tools like ChatGPT to streamline the creation of these narratives. It’s a time-saver, allowing you to focus on fine-tuning the story rather than getting bogged down with formatting.

Conclusion:

Incorporating these elements into your description of operations can significantly elevate the quality of your submission. It’s not just about listing facts but creating a narrative highlighting a proactive and strategic approach to risk management. Remember, underwriters are looking for reasons to confidently underwrite a policy at competitive rates. By providing a detailed, well-thought-out description of operations, you’re facilitating the underwriting process and, as an agent, advocating effectively for your client’s best interests.