Navigating business insurance renewals in challenging conditions
Published 11 August 2020
7 steps to securing optimal business insurance cover and terms.
This article offers guidance on steps large businesses should take with their broker when renewing an insurance program in the current challenging market, to ensure the process delivers results and the best achievable outcome.
With commercial insurance across most sectors increasing in price and decreasing in availability continuing to present challenging environment for insurance renewals still capacity for renewals where organisations have invested time and strategy into differentiating their risks. The key to achieving optimal results is to start preparations early and present the relevant information transparently.
Build a strong relationship ahead of renewal
Your relationship with your insurance broker and their relationship with providers in the insurance market are of critical importance. It’s imperative that your broker understands your organisation and knowsthe individual risk exposures associated with your business. This enables them to design a fit for purpose insurance and risk program, ensuing you get value for money with the correct coverage in place.
Start renewal preparations early, at least 3 months before renewal for mid to large businesses and for complex risks
The more time your broker and you and your business team have to work on the renewal of your insurance program, the more likely you will gain an effective result in this challenging insurance market. That demands putting in the time to gather the relevant and comprehensive information so that it can be presented to potential insurers well before the renewal date.
Building in a longer lead time enables your broker to properly market your insurance program to, and negotiate with, potential insurers, presenting your business in the best possible light.
Choosing the right insurer
While most insurers are well established and have numerous risk and insurance offerings, the underwriting appetite and risk assessment considerations vary across insurers, It is important to work with the right insurers for your business needs - you need to be discerning about which will perform best for your business and be the right fit for you, taking into consideration the individual risks and exposures associated with your business.
Your broker can assist with insurer selection by assessing your insurer on their past performance, underwriting approach, responsiveness and how they handle and respond to claims in the current environment.
Provide detailed information that represents your risk profile in positive terms
Be prepared to document and detail your risk management protocols. In the current market conditions insurers will require more underwriting information. Collect and collate accurate, up to date building valuations and risk surveys. Insurers will also want to see your business’s risk control processes, supply chain management and your risk management program.
Work with your broker so that they can present your insurance needs to potential insurers in a tangible manner that will resonate and be attractive.
Be open to flexible, innovative ways of structuring your insurance program
The insurance market isn’t static but in fact highly responsive to claims impacts and events that alter the perspective on risk. Be open to working with your broker around changes to pricing, deductibles and coverage.
Your insurance broker may be able to offer creative solutions for high risk businesses where the insurance market may be unwilling to deploy their capital. If you’re willing to take more risk on your balance sheet, let your broker know.
Local and international reach and relationships are options worth consideration
Large organisations and those with specific or hard to place risks benefit from access to a wide range of insurers from both local markets and overseas. London and Singaporean based insurers can provide capacity for some types of risks that may be difficult to place with local Australian based insurer, so be prepared to seek out wider options from global markets and take a flexible approach to working with insurers that may be new to you.
As your broker we work to secure cover on optimal market terms
The extent that your renewal will be affected by the transitioning hard market will vary depending on your risk profile, claims record, strategies for risk management and the capabilities of your insurance broker, but in this current climate most organisations should be prepared to see sizeable increases in premiums.
We work with a large variety of businesses, each exposed to unique risks and dealing with individual challenges and circumstances. As one of the leaders in risk management, we remain fully committed to supporting businesses through these uncertain times.
Even in a hardening market, capacity remains as insurers are still competing for business. Start working with your broker well before renewal to ensure favourable results.
Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general information purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient’s industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers’ control.
Insurance brokerage and related services to be provided by Arthur J. Gallagher & Co (Aus) Limited (ABN 34 005 543 920). Australian Financial Services License (AFSL) No. 238312