Delaware Insurance Update from CNC Insurance Assoc. " Know Your Total Cost Of Risk" 4-26-16

Total Cost Of Risk (TCOR) , is a measurement that many business owners do not know about. Calculating your business TCOR and working to reduce it each year can add more profit to your bottom line. Let's dig in. Just operating a small business everyday produces risk. Buying insurance to protect the business from risk is what every business owners have to do. Adding up how much insurance costs your company is Step 1 in figuring TCOR.  Now look at any retained losses you had to pay out of  pocket in the course of a year, like deductibles, or losses that you didn't even turn in to the insurance company. Add these up and you have Step 2 in figuring TCOR.  Including any fines or penalties is Step 3. This would include Federal or State fines, or regulatory penalties for your operations. It could also include contract damages, or breaches. Next,  add the labor costs and administration costs of safety personnel and risk management personnel to get Step 4. Now total the results of Steps 1 +2+3+4= TCOR.
By knowing your TCOR number each year you can actively work to reduce it. This can be accomplished by looking at the numbers in each of the steps. Most business owners focus only on their insurance premium costs and try to find ways to keep it in line. However using the TCOR as a guide, cost reductions can be achieved from the other steps as well. This could mean more profit on the bottom line. Until next time be careful out there and know your risks.

G. Kevin Nemith, President CNC Insurance & The Small Business Insurance Center
Serving DE, MD, VA, ,NJ, & PA
www.cncinsurance.com


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