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The insurance marketplace is a funny place; pricing and availability can appear and disappear seemingly at random, and predicting changes is more an art form than a science. Some years, insurance buyers benefit from falling costs and expanded cover. Other times, when markets harden, business owners face unexpected large cost increases. Understanding how you can prepare for an insurance“ hard market”— and putting those preparations into practice— can help your firm maintain appropriate cover without“ breaking the bank”.
Market conditions have deteriorated sharply in the last 12 months. We are now in an extremely tough insurance market with large premium rises and restrictions in cover the norm. This is particularly the case for the leisure, hospitality and construction sectors where premium increases of 50 % and more are not uncommon. There are several reasons for this, the main ones being:
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• increased frequency of storm and flood losses due to climate change
• Covid-19 claims
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• reduced investment returns
• higher solvency demands from the regulator forcing them to keep more capital in reserve.
Insurance is a cyclical business and the above factors plus the lack of new capital being raised has proved challenging for many insurers with some insurers pulling out altogether.
SELLING YOUR STORY TO AN UNDERWRITER Hard markets make underwriters more critical, so make your business stand out from the crowd and be attractive to an insurer. Work with your broker to present your business in the best possible light.
1. Audit your information for accuracy: make sure the insured values and information about your business is correct & complete. Particularly if you have invested in upgrades to security or fire protection systems.
2. Know your loss history: You have to be prepared to explain the factors contributing to a specific loss and the steps you’ ve taken to prevent future claims.
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3. Don’ t wait until the last minute: Underwriters take more time and ask more questions so start the process earlier – 8-12 weeks before is advisable for larger SMEs and above.
TAKE ANOTHER LOOK AT YOUR INSURANCE COVERS In a hardening market, some covers may simply no longer be cost-effective for your firm. Concentrate on risks you cannot afford to occur such as loss of buildings, machinery, stock or the ever increasing risk of cyber outage / attack.
Business owners who proactively address risk, control losses and manage exposures will be best placed to minimise the price increases in this hardening market. Work with your broker now to prepare your business for next insurance renewal so you don’ t get a nasty surprise with no time to look for alternatives.
If you would like help navigating the hard market, contact us for an alternative quotation or just for assistance and advice.
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ians @ markrichard. co. uk 0117 947 9514
For more info: www. markrichard. co. uk
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