For corporate and commercial clients, purchasing insurance in the current ‘hard market’ presents significant challenges. As we enter the fourth calendar year of hard market conditions, the withdrawal of capacity means there is reduced competition between insurers, resulting in fewer options for clients. At the same time, clients are facing higher premiums, reduced limits/sub-limits, and longer lead times. Not all is lost, and there are actions you can take to achieve better insurance outcomes. Here are our top 5 tips.
1. COMMENCE RENEWALS EARLY
Renewals have become a lot more complex and require more time to complete. Depending on the individual risks and the number of stakeholders involved, we recommend commencing the process with your broker 3 months from renewal. Beginning the process early allows you and your broker to establish realistic expectations, meaning you can budget appropriately for an increase in premium, additional risks to the balance sheet (higher deductibles), uninsured exposures (exclusions such as Pandemic/Infectious Diseases), or all of the above.
2. HAVE A CLEAR STRATEGY WITH SOME FLEX
Working with your broker to develop a clear engagement strategy will assist you in negotiations with underwriters. Underwriting guidelines change regularly, so having some flexibility in your strategy means you can pivot to a plan “B”, “C” or “D”. Such alterations may require an increase in certain deductibles, removing non-essential cover or a revision in the level (limit) of insurance needed.
A change in strategy could also mean presenting the risk to diversified markets overseas, altering the mix or panel of insurers involved in the program.
3. INFORMATION IS KEY
Underwriters now require more information to properly assess the risk and appropriate pricing. Additionally, the need for the underwriter to ‘sell’ the risk internally requires greater checks and balances. To maximise the chance for a positive management referral (and minimise time delays), we recommend our clients invest time, energy and resources in providing a detailed submission.
A detailed submission includes:
- Quotation slip clearly outlining the desired cover
- Updated values (turnover, insured values, wages etc.)
- Detailed claims history for the past 5 years
- Response to all risk management recommendations
- Any other actions you are taking to minimise risk
If a formal valuation has not been completed in the past 3 years, then we recommend one being completed to reduce the risk of a) underinsurance and or b) co-insurance* conditions being applied.
4. DIFFERENTIATE YOUR RISK
Obtaining favourable terms and conditions is easier when your risk positively stands out from the crowd. With the aim of improving underlying profitability, Insurers are more risk selective, have less capacity to offer, and they are focused on reducing the overall accumulation of insurance in their books. We recommend that clients formally present to insurers at least once a year to promote the positive aspects of their risk management program and any initiatives being implemented to reduce risks.
5. REGULAR COMMUNICATION
The market is moving at a faster pace than we have seen in the past key decades. Therefore, it’s important to keep in regular contact with your broker. Regular communication also makes it easier to revise your strategy quickly, if needed. Involving other key stakeholders within your business (e.g., the CEO, CFO, Risk Manager etc.) in these communications can enable wider buy in.
We’re with you all the way
While the current market conditions are challenging, these strategies can enhance the “attractiveness” of your business’ risks to the insurance market. To find out how we can assist in developing an insurance strategy that’s right for you, please reach out at any time.
National Head of Corporate Insurance & Risk Solutions
*Co-Insurance is an instance where, as a result of inaccurate (lower) asset valuations, you may be required to contribute to a percentage of the claim.