With the increase of weather-related catastrophes and natural disasters, along with the impact of COVID-19, the commercial insurance market is seeing a significant rise in rates. This hardening of the commercial insurance market is putting pressure on carriers and therefore businesses are seeing consistent increases in renewal premiums and a tightening of underwriting guidelines and coverage offerings. There are several ways your organization and customers can mitigate premium increases.
Business as usual is anything but usual, and that will probably affect your operations for the foreseeable future. Not surprisingly, your next insurance renewal is unlikely to be as straightforward as it may have been in the past. The hard market and COVID-19 impacts have added complexities, which makes it crucial to prepare early for your insurance renewal. Regardless of the type of insurance coverage, there are certain questions you should think through.
Business Changes
- Have there been substantial changes in your operations or business practices?
- Are there any significant changes in your finances, liquidity or cash flow?
- Have you experienced a change in workforce (furloughs/layoffs/hiring/remote workers)?
- Are you considering a merger or acquisition?
Policy Review
- Do your policies offer the right amount of coverage to protect you from risk?
- Have you done a recent risk analysis to understand if you need to adjust coverage (such as cybersecurity or D&O)?
- Have you considered optional deductibles?
- Have you recently received a replacement cost valuation?
- Have you adjusted estimated payroll or revenue on your current policy?
Claims Data
- Are your reserves at the right limit for open claims?
- Do you have any claims that can or should be closed?
- Is your experience modification rating (EMR) accurate?
Risk Management
- Has your broker provided a recent loss control or site survey?
- Has your risk tolerance changed?
- Did you meet your risk management goals? If not, why?
Your insurance broker should schedule a pre-renewal meeting with you 60 to 120 days prior to your renewal date to discuss what underwriting information is needed and how to best present it. Make sure you aren’t blindsided with a large increase in premium and no time to shop. Begin your insurance renewal preparations now by taking these steps:
Gather Required Paperwork
- Cover all legal entities.
- Physical addresses for all locations with employees – remote and offices.
- Updated annual payroll by class code and state.
- Full-time versus part-time employee payroll by class code.
- Five years of loss runs reports from your previous carrier (currently valued within 90 days of renewal.
- Supplemental applications as applicable.
Create an Effective Submission
- Include a detailed description of your operations, including changes in the last policy period and risk controls.
- Explain any claims and the actions you’ve taken to mitigate future losses.
- Define your safety and loss prevention efforts. Such as building improvements, installing new fire safety systems, additional lighting, or building upgrades.
- Describe other attributes that positively impact your organization’s risk profile.
Prepare in Advance
- Implement carrier loss control services.
- Use carrier risk management tools.
- Consider multi-year rate guarantees.
- Work with a broker who has expertise in your industry and excellent carrier relationships to negotiate on your behalf.
As you can see, it will take some time to prepare properly. Your insurance broker or risk manager can be key in guiding your insurance renewal process. A qualified broker can help you analyze your business, provide the guidance, insight and expertise needed to be prepared for stricter underwriter scrutiny, and put you in a positive position for your renewal.
Your Team
You may have questions. We’re happy to provide answers. Should you require additional information, don’t hesitate to contact the author, Kris St. Martin at KStMartin@cbiz.com or 763.549.2267.