With January 2024 renewals around the bend and a challenging insurance market for certain lines of business, planning ahead is critical for you and your clients. Following are several recommendations and reminders to help ensure a smoother renewal process.
Reach out to insurers well in advance of renewals so everyone is clear on the impact of current events on the market.
This will allow for time to negotiate policy terms and conditions and to advise your clients of any pending changes.
Communicate with your clients often. Be transparent about what is going on in the market and how it affects them.
Commercial Property insurance, Homeowners insurance, and Automobile insurance are just some of the coverage lines that are challenging, with rate increases, capacity restrictions, changing coverage terms, exclusions, and in some cases few markets due to carrier exits.
Back up your conversations with data and statistics. There are plenty of articles in the news you can share with clients that explain what is going on. Industry publications, associations, and insurance-related firms also provide information you can provide to clients for detailed insight into why certain product lines have seen higher premiums and new coverage conditions.
For example, the average annual loss from natural catastrophes globally is now at $133 billion, representing a new high according to Verisk. Not only could insured losses from natural catastrophes exceed $100 billion every year, the Verisk report says annual losses greater than $200 billion are also plausible. These statistics put what’s going on in our industry in perspective and help explain why carriers have implemented appetite changes for Commercial Property insurance in certain areas of the country and why rates have gone up.
If your clients will be experiencing significant increases in insurance rates, meet with them ahead of time.
As we mentioned, the Commercial Property insurance market is increasingly challenging. This is due to insured losses from natural catastrophes, secondary losses (convective storm activity), and rising property values. Commercial Property insurance, in fact, experienced the highest reported increase of all coverage lines, at 18.3% in the second quarter, according to The Council of Insurance Agents & Brokers (CIAB).
Prepare your client’s top management for anticipated budget/premium consequences, coverage changes, and extended delays in getting quotes for some lines. Even the earliest renewal proposals may be finalized at the last minute, especially for bigger shared and layered operations with catastrophe exposures.
In addition, valuations are important to insurers as a result of catastrophic property losses. Make sure property values are accurate and supported when submitting a renewal application. Assist with navigating property ITVs and reviewing rebuilding cost estimates.
Discuss higher deductible options, particularly for those in catastrophe-prone areas. If coverage is hard to come by because of carrier exits and underwriting restrictions, look at alternative markets.
Ensure submissions – Acord forms and supplemental apps – are complete with all the information the underwriter needs, including whether there have been any changes in the client’s business that could impact their insurance program.
If the business has experienced losses and has made progress in improving its risk management program, outline in detail the strategies and tactics that have been implemented. Even for a business with a good loss history, share the quality of the organization’s risk management, safety protocols, and loss-control measures as a differentiator as part of its risk profile. It’s important to tell the insured’s complete story.
Agents and brokers are having tough conversations with clients as rate increases, changing coverage terms and conditions, and carrier restrictions occur for specific product lines and in certain geographic areas. Starting renewal discussions early with clients and carriers, MGAs, and wholesalers combined with early submissions is essential in today’s hard market.