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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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