Business Insurance Is Not a Commodity: It's Your Last Line of Defense

In today's complex risk environment, it's easy to fall into the trap of treating business insurance like any other expense, just another line item to shop for the lowest price.

But here's the truth: Insurance is not a commodity. It's a backstop, not a strategy.

The companies that manage risk best don't rely on insurance as their first line of defense. They treat it as the last resort, after doing the real work of risk mitigation and control.

The Problem with a Price-First Mindset

When insurance is bought purely on premium, important things often get overlooked:

• Gaps in coverage that only surface after a loss
• Insufficient limits for evolving exposures (cyber, social inflation, etc.)
• Hidden exclusions and sublimits
• Poor claims advocacy when it matters most

The cheapest policy often becomes the most expensive mistake.

A Better Approach: Risk First, Insurance Last

Smart businesses treat risk management as an operational strategy, not just an insurance transaction. Here's how:

1. Risk Identification & Assessment

Start by understanding your company's specific exposures: operational, legal, financial, and reputational.

2. Risk Mitigation & Control

Implement processes, training, safety programs, contracts, and technology to reduce the likelihood and severity of potential losses.

3. Risk Financing & Insurance

Once risks are minimized, structure insurance to cover catastrophic events or uncontrollable losses, not everyday operational issues.

The Benefits of This Approach

• Fewer claims, better loss ratios, leading to lower premiums and better underwriting terms over time.
• Improved business resilience: you're better prepared for risk before a policy is ever triggered.
• Greater control over costs: you're not just transferring risk, you're managing and reducing it.

Final Thought

Insurance should never be your first defense against loss. It's your parachute, not your airplane.

By leading with risk control and mitigation, and using insurance as the final layer, you build a stronger, more sustainable, and more insurable business.