What steps should my business take to prepare for its next renewal?
As the COVID-19 pandemic continues, one of the outcomes has been premiums increasing and the capacity for different insurance classes decreasing. This has left businesses with many questions about what they can expect from their current policy and what risk management strategies they should implement. Below, our Development Director, Troy Johnson, discusses the current hard market and what steps your organisation should take to mitigate risk and prepare for your next renewal.
In March this year we wrote an article about the changing insurance landscape, with premium increases predicted and already evidenced in some industries and insurance policies. Little did we know then how seismic a year 2020 would be for the insurance industry.
Premium increases are now being seen across most sectors and insurance policies. Whilst some are being impacted more than others, no-one is completely immune.
There are six primary factors influencing this trend:
- Insurer solvency
- Significant claims
- Investment returns for insurers
- Low interest rates
- Global connectedness
As we are seeing and experiencing with COVID-19, the world is extremely interconnected, with many incidents impacting economies well outside the location of the actual event.
Prior to this year, the insurance industry was looking to correct historical mispricing of risks that had resulted in operational shortfalls for a number of insurers. Thirteen insurers have gone bankrupt since 2000. An uncomfortable statistic for an industry that takes pride in risk management!
We expect disciplined risk selection to continue through increased rates and contracting coverage. Insurers will continue to refine their appetites and underwriting guidelines.
Organisations who are unprepared will likely face significant increases and worse if they need to replace insurers. Whereas those organisations able to show the efforts made to address underwriter concerns will be in a good position to mitigate and nullify these challenges.
At Griffiths & Armour we work closely with our clients to help them understand and improve their risk profile. RMworks is our risk management platform, an industry-leading online facility that supports the introduction and maintenance of high quality, efficient and effective risk management practices. Available to all Griffiths & Armour clients, RMworks is an integral part of our ongoing commitment to provide support through proactive and tailored risk management solutions.
What are the next steps?
Timing is key. Insurer capacity is not the only limiting commodity, insurer attention must also be addressed. With submission flows up by over 50%, underwriters and management devote their efforts to respected, collaborative partners – brokers and clients alike.
Engaging with your insurance broker early will ensure that you are in the strongest position to prepare for your upcoming renewal. You can differentiate your business risk, protect against premium increases, avoid coverage restrictions and buy more reliable cover.
We are always interested to hear your views so if you have any questions or comments on this article, please get in touch with your dedicated insurance broker at Griffiths & Armour or alternatively, contact Troy Johnson below: