Central Insurance Blog

During lean periods or when you’re trying to grow your business amidst market volatility, many small and mid-sized companies start looking for cost reduction opportunities in the budget and operations. But when it comes to insurance, cutting too deeply—or in the wrong places—can expose your business. 

The good news is combining proactive loss control measures with smart underwriting partnerships can reduce costs without sacrificing coverage.

This article highlights smart insurance strategies that can save you money, with expert tips from Chad Ellis—senior loss control manager—and Mike Morse—director of small business underwriting—at Central Insurance.

Long-term Cost Reductions Start With Loss Control

Before exploring cost reduction strategies, it’s important to understand loss control and how dedication to this practice can positively impact a company.

Loss control is about preventing insurance claims by identifying potential exposures and recommending ways to reduce them. At Central, in particular, our loss control team members collaborate with underwriters to better understand a policyholder’s risk to ensure each account is accurately evaluated and priced.

“The fewer claims you have, the more favorable your underwriting profile becomes,” Ellis states. “Which could have an impact on your future premiums.”

In practice, loss control can cover a wide range of initiatives: hazard assessment of your business location, Workers’ Compensation safety program best practices, and even risk transfer strategies like subcontracting higher-risk activities to insured vendors. 

Loss control can also benefit companies across many different industries, including electrical, construction, transportation, commercial office, wholesale, manufacturing, and many more. 

When it comes to innovation, loss control technology is playing a bigger role than ever before. Dash cams, telematics, and surveillance systems give organizations an undeniable view into daily operations that can help determine safety gaps and streamline processes. “Hard to argue with camera footage,” Ellis emphasizes.

Loss control also connects businesses to valuable resources such as Central’s 24/7 nurse triage hotline for Workers’ Comp incidents, which helps reduce claims costs by offering quick, non-emergency medical guidance. 

Beyond preventing injuries, proactive loss control measures can improve claims history and loss ratios, making accounts more desirable to underwrite and potentially leading to long-term premium stability.

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Cost Reductions From an Underwriting Perspective

As an insurance underwriter, Morse explains that, when determining rates, his team looks for certain signals that a business is actively managing risk. These signals include engaged leadership, pride in ownership, dedicated safety or building managers, annual roof and equipment servicing, consistent safety training, formal fleet safety programs, and regular driver MVR checks. 

“Actions like these generally result in favorable loss experience that can positively impact your pricing,” he adds.

On the other hand, some common missteps can unintentionally drive up costs:

1. Underestimating building or inventory values: If values are reported too low, you risk being underinsured. In the event of a loss, the claim payout may not cover full replacement costs, and you could be subject to a coinsurance penalty. Insurers may also adjust premiums later to reflect the correct values.
2. Misreporting payroll or sales figures: Premiums for certain coverages (like Workers’ Compensation or general liability) are calculated partly on payroll or sales. Underreporting can lead to a large bill at audit time, while overreporting means you’ve been overpaying all year.
3. Hiring inexperienced drivers: Commercial auto insurers heavily factor driver experience and records into premiums. Inexperienced drivers statistically have higher accident rates, which can trigger higher base rates, surcharges, and potential claim costs that push future premiums upward.

Morse highlights that business owners can position themselves for more favorable underwriting outcomes by staying proactive, providing accurate information, and making safety a visible priority.

Avoid Underinsuring as a Cost Reduction Technique

One of the most common cost-cutting mistakes businesses make is dropping important coverages to save on premiums. Both Ellis and Morse advise against this approach.“You want to make sure your limits, deductibles, and coverages are aligned with your actual exposures,” Ellis comments. That might mean raising deductibles on low-frequency claims while keeping robust protection for high-impact risks.

Cutting corners on coverage might trim costs now, but it can expose you to devastating losses if a major claim occurs. Instead, Morse recommends maintaining open communication with your agent and carrier year-round, not just at renewal, so your exposures and coverage stay aligned with your needs.

Learn more: What Commercial Insurance Policy Does My Business Need?

The Cost Reduction Payoff of Proactive Risk Management

Ellis highlights that loss control experts don’t just spot hazards; they act as a bridge between the policyholder, the agent, and the underwriter to ensure everyone has a clear picture of risks. He emphasizes that this collaboration often leads to practical, tailored solutions rather than one-size-fits-all recommendations.

Cutting costs doesn’t have to mean cutting corners. By focusing on risk reduction, right-sizing coverage, leveraging technology, and prioritizing employee safety and health, you can achieve cost reductions while protecting your business.

“Safety should never have a price tag,” Ellis emphasizes. “Invest in safety training, conduct regular audits, implement ergonomic practices, encourage incident reporting, and utilize technology to protect your employees. Engage with employees, review policies regularly, analyze incident data, and create incentive plans to reward safe behavior.”

This proactive approach can reduce risk, prevent costly claims, and help identify operational improvements that can boost efficiency and reduce costs.

The Central Difference: Safety Backed by Service

At Central, loss control isn’t just a box to check—it’s a partnership built on trust, expertise, and proactive support. 

Our dedicated loss control specialists work hand-in-hand with knowledgeable, customer-focused agents to identify risks before they become costly claims. By combining clear, ongoing communication with decades of industry experience, we deliver solutions that protect your business and your people.

Guided by values of hospitality, integrity, and excellence, we ensure you’re never navigating safety or coverage decisions alone—because at Central, your long-term success is our priority.

Not sure where to begin? A knowledgeable independent Central agent can guide you through your choices and design coverage that fits your unique risks and goals.