If you knew you had a one in 3 000 chance of winning $10 000 would you buy a $10 ticket? If you paid $100 for the same ticket but increased your chances to one in 2 000 would you do it?  Similarly if you knew there was a one in 1 000 chance you’d get in an auto accident driving down Marine Drive on a Wednesday afternoon would you drive on a Wednesday afternoon?  What about Fridays?  Would you do anything to increase your odds of winning or decrease your odds of crashing?  What would you pay to have that kind of insight or protection?

I recently had a discussion with a client who told me that he felt he was wasting money buying insurance from me because he hadn’t made a claim in a few years and got nothing for the money he paid me. I told him if he really wanted something tangible some companies would give  him T-shirts or fancy window shades for his business. I asked him if he’d pay $10 for a chance at $10 000. Or how much premium he thought was fair to cover the several hundred thousand dollars that would be required to get his business back up and running after a fire? "Yes I would buy the $10 ticket even the $100 one " he said. "But what’s fair?"

Would you spend the extra $90 to increase your chances? Would you drive more cautiously on Wednesdays if at all? Take another route? Or pay someone else to drive you and assume the risk?  A risk after all is a chance something might happen good or bad. In this example just as the risk of a positive outcome could be increased action can be taken to manage the risks of a negative outcome.

"There are two things you are buying from me " I told him. "A promise and options. When you pay for your lottery ticket you are promised an equal chance to win the $10 000. When you pay your premium you’re getting my promise to pay your claim in a fast and fair manner. A different route $100 to increase your odds a different driver or a different driving day – those are all options."

Back to insurance. "You pay me to look out for your risk – to manage them if you will good or bad and to give you honest advice " I told him. Others might try to dazzle you with discounts T-shirts and window shades. If they aren’t spending time getting to know you or your business how do you expect them to anticipate your risks good or bad and provide you with real options? After all wouldn’t options allow you to run your business more flexibly?
Don’t settle for the cheapest guy either. Like a good wine and single-ply toilet paper you get what you pay for. That cheap guy will probably want you to bring in a quote from another company so he can beat it. Let him work for it. Let him do his own homework and get to know your risks.

As you wouldn’t just take anyone as your business partner give the relationship with your insurance man some time and effort. After all he does have your back – you hope.
Lastly think through the purchase and make sure what you are buying what is needed and more importantly is accepted by the military guys you are trying to do business with.

– David Silva III is general manager of Century Insurance Company (Guam) Ltd. He can be contacted at [email protected]