Stand out from the crowd: How to approach renewals in a hard market

Businesses face a raft of challenges in the current insurance market with hardened conditions continuing, the ripple effects of a global pandemic and political and economic considerations all having varying impacts on insurance.

It is not surprising that policyholders in this environment face the prospect of their insurance renewals with some trepidation. In such times, it is imperative that you, as a client, align yourself with an insurance broker that understands the insurance landscape, can provide comprehensive insights into market conditions and has the ability and capacity to secure competitive terms and conditions without comprising on cover.

At Bellrock, we have developed a methodology, working closely with our clients throughout their policy period so we may prepare and strategise for their next renewal. Here we list our top 5 strategies for a streamlined and successful renewals process:

Article quotes renewal article
1. Provide detailed, comprehensive information

Quality and accuracy of renewal information is imperative. The information must be streamlined and enticing to insurers. The term “risk prospectus” is being used by brokers when presenting to prospective insurers. The information must be comprehensive but succinct enough for insurers to be interested to quote. In softer market conditions, insurers have been more willing to underwrite risks based on minimal information – this is no longer the case.

Bellrock has consistently observed insurers being far more selective in their underwriting processes. There is a greater need to present proactive risk management strategies, particularly for industries and professions susceptible to topical and publicised issues.

Detailed analysis of current trends facing the policyholder’s industry or profession should be addressed and strategies to prevent impact of same clearly articulated. This includes changes at the company itself in its operations, composition of board, staff, acquisitions, mergers or diversification, and detailed profiling of mitigation efforts in respect of each of these.

2. Prepare for longer lead times

Insurers are often under-staffed. They also have significantly more requirements to satisfy when issuing quotations. Ordinarily this is resultant of more restrictive underwriting criterion and less authority being conferred on underwriting staff. Often underwriters must refer their work to senior managers, to the parent office or to reinsurers.

Engaging with the market early – at least 3 months prior to your renewal – is recommended.  The timeframe will vary depending on the complexity of your placement, however at the outset of the renewal process, it is important to set milestones.

Where there is delay in receiving information required for renewals, this may significantly impact the timing of receiving renewal quotes. A longer lead time will allow the broker additional time to negotiate coverage and premium.

Ultimately, early engagement and planning are key to successfully navigating through this changing market. The only issue with early engagement is that given the poor and limited staff resourcing at insurers at present, ordinarily accounts will only be reviewed 30 days prior to their due date. It is therefore imperative all underwriting information is with the broker so they may push for quotes at the commencement of the 30 day window.

3. Engage in effective client/broker/insurer communication
Communication between parties is key to successful renewals. The starting point must be open dialogue between broker and insurer addressing the following issues:
  • What are they concerned about with the particular policyholder and how would they like these addressed pre-renewal?

  • What are the internal pressures they are facing on renewal with that risk?

  • Do they foreshadow any changes in underwriting appetite which may prevent renewal/impose more restrictions on cover/significant premium or excess uplifts?

  • If there are claims, is there any specific information required from lawyers/experts/the policyholder prior to renewal — engage with the insurers claims Team.

The broker should, after these discussions be able to map out renewal milestones and matters to be dealt with during the renewal process. If the initial discussion is had with the underwriter, they would be able to provide estimates of market appetite, potential coverage issues and premium pressures at the commencement of renewal. There should be no surprises then when quotes are presented closer to the renewal date.

During the course of the broker’s work, updates should be provided. Realistic expectations of timing should be set and agreed, including timing as between the date of receiving quotations and requesting formal instructions to proceed with renewal and thereafter confirmation of cover (including issuance of certificates of currency).

4. Think outside the box

Choose a broker that will engage with you as a partner — an outsourced risk manager and adviser. That broker should task itself to work collaboratively with its client to develop sound and long-term risk transfer strategies. Risk financing (insurance) is only one of these methodologies.

Work can be done to address exposures and risk transfer strategies. This should be coordinated with the broker in partnership with the policyholder and their wider network of professional advisors. By way of example a professional services firm may work with its broker and lawyer to look at limitation of liability in retainers. But do not stop there — those who undertake contract management within a company must be trained on the retainer: what to look for, how any changes impact liability and insurance. The broker will be armed at renewal in these circumstances with contemporaneous evidence of risk management. This approach will be looked upon more favourably than an insured simply ticking yes on a proposal form that it reviews its contracts.

Where there have been new, open or closed claims these need to be addressed — not just by discussing outcomes of those claims but by examining their cause and analysing preventative measures to stop future occurrences. Claims should be put at the fore with insurers and addressed, not buried. It is key for insurers that losses are not deemed to be systemic issues. Therefore, if something has happened in the past – insurers will want to see that strategies have been implemented to prevent it from happening again. Insurer loyalty is key to securing the best possible outcome for clients. We speak of this in our article Insurer loyalty and long-term pricing stability: is it worth it?

5. Understand and address emerging risks

Where a company can address key risk exposures to which insurers have concern, this will be looked upon favourably by underwriters.

By way of example, Environmental, Social and Governance (ESG) is of key concern to insurers underwriting Directors’ and Officers’ liability (D&O) insurance. By engaging with experts to address a corporation’s strategy on ESG, identifying its failings and addressing them via a remediation plan, you will demonstrate to the underwriter of the policy that the insured is taking a proactive position on mitigating against an emerging or trending risk.

See here how Bellrock engages with third parties on similar issues. This in-turn provides our clients with strong governance, transfer of risk, demonstrative risk-mitigation and overall, a more attractive risk profile. The benefit here is greater insurer interest that leads to better insurance outcomes.

“Arranging” insurance is only part of what we offer at Bellrock. To do that properly we must first understand your business objectives, identify risks and assist to transfer those risks by other means. Where insurers truly believe that the coverage they offer is the policyholder’s last line of defence to trigger only in the most remote of circumstances, then they will actively seek to participate as the policyholder’s insurer.

To discuss your insurance needs with one of Bellrock’s experienced brokers, please contact us via the form below.

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