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Writer's pictureCollin Telman

Beyond Premiums: Why Simplifying Risk Costs Can Save You Money & Impress Insurers

As a business owner, you juggle countless hats, so understanding complex financial models like Total Cost of Risk (TCOR) can feel daunting. But fear not! TCOR, despite its fancy name, simply looks at all the costs associated with risk, not just your insurance premiums. It's like taking a deep dive into your risk "pool," uncovering hidden expenses that impact your bottom line.



Why does this matter? Because hidden costs often outweigh premiums, eating into your profits and hindering your financial health. TCOR sheds light on these hidden expenses, like:


  • Retained Losses: Deductibles, uninsured losses, and legal fees.

  • Indirect Costs: Lost productivity, employee downtime, and reputational damage.

  • Administrative Fees: Time spent dealing with claims and risk management.


Go on offense


By understanding these costs, you can:

  • Identify areas for risk reduction: Invest in safety training, proactive maintenance, or stronger cybersecurity to proactively prevent losses.

  • Negotiate better insurance coverage: Having a clear picture of your full risk profile empowers you to negotiate terms that truly align with your needs.

  • Impress insurers: Demonstrating awareness and proactive risk management makes you a more attractive client, potentially leading to lower premiums and better terms.

Think of TCOR as your secret weapon:


  • Financially: By identifying and tackling hidden costs, you free up valuable resources and boost your bottom line.

  • Market Perception: Insurers see you as a risk-savvy business owner, willing to go beyond basic coverage, potentially leading to better quotes and terms.

keep it simple

Remember, TCOR doesn't require a finance degree. Start by simply listing all the potential costs associated with potential risks in your business.


Even a basic analysis can reveal hidden expenses and empower you to make informed decisions that secure your financial future and impress the insurance marketplace. By taking control of your risk "pool," you're not just saving money, you're building a stronger, more resilient business.

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