Your business risks and assets are unlikely to be the same as they were a year ago. There may also be legislation and regulatory demands that require reassessment of operational structures, potentially leading to adjustments in processes, supply chains, and corporate policies. These may involve heightened insurance premiums, increased finance costs/tightening of terms and conditions, the adoption of alternative technologies and increased costs for specialised third-party services due to regulatory demands.
Just as priorities can shift in any business, insurer appetites and policies change, and that can mean rising premiums, greater excess requirements and reduced coverage terms.
Renewals are best managed in a structured and strategic way. Having the services of an experienced business insurance broker in the renewal process provides expertise, support and advice for accessing and negotiating insurance markets and cover. To achieve effective renewal outcomes it's worth making the key steps below a focus.
Build a strong relationship with your broker ahead of renewal
Your relationship with your insurance broker and their relationship with providers in the insurance market are of critical importance. It's imperative that your broker understands your organisation and knows the individual risk exposures associated with your business. This enables them to strategically design a fit for purpose insurance and risk program, ensuing you have the correct coverage in place for your business's risk appetite.
Start the renewal preparations early
Business and broker collaboration to review and update your business risk exposures and specific changes, and also considering key risk concerns and future needs provide the key foundations to shaping a fit for purpose insurance program.
The more lead time your broker and your business team have to work on the renewal of your insurance program, the more likely you will gain an effective result aligned to your goals. That requires time to gather comprehensive information to be presented to potential insurers well before the renewal date.
For medium to large businesses, building in a longer lead time to prepare your insurance requirements at least three months ahead enables preparation of detailed supporting information and allows your broker to properly market your insurance program to, and negotiate with, potential insurers.
Reassess your business insurance needs
Consider how your business has changed: have you expanded or reduced your locations, added or cut staff numbers, outsourced some functions or invested in or divested yourself of plant and equipment? Do you need additional cover for new exposures and are there some areas that are no longer relevant? Think ahead about future business scenarios or plans, are there different insurance and risk needs to support? Are there new legislation changes, or updated regulations that need to be addressed that will have an impact on the business?
Changes to review for business insurance needs would typically include:
- business changes around growth or changes in premises changes
- gaining or losing employees
- financial changes in turnover and cash flow
- innovations such as changing industry practices
- updated operational processes in response to external factors, including regulations, legal exposures or trends that give rise to future risks
- shifts in markets, including new competitors and meeting new service expectations
- new business operations — like adopting new technologies which could affect privacy of data and intellectual property.
Conducting an up to date audit of your operations and assets helps clarify the policies and cover you require now and over the coming year.
Provide detailed documents that represent the risk profile in positive terms
Demonstrating proactive business risk management practices and providing information about how you actively manage the risk exposures in your business operations is key for insurers in assessing your business risk exposures. Insurers can be selective about the risks they are willing to support, and want to see detailed underwriting information. Providing evidence by documenting your business's risk control processes, supply chain management and regular risk surveys will work towards improving your risk profile.
Your broker's input can be invaluable in selecting business risk information to supply, advising ways to minimise your risk exposures and presenting your risk management and insurance needs to potential insurers in a constructive way helps achieve a positive outcome.
Insurance selection — include local and international markets
Insurance selection involves two broad areas of consideration: insurance policy selection and choice of insurers. Choosing which insurance policies — and the provisions and limitations of the cover, including deductibles that may provide pricing flexibility around premiums and excesses, as well as the levels of coverage — can enable greater flexibility and a more customised insurance program to suit low or high risk appetites across the different risk areas that apply to your business.
The process typically might include:
- assessing the quality of insurance cover
- identifying gaps in cover
- addressing exclusions and flexible structuring within policies
- reviewing insurers and options for securing optimal coverage.
Choosing insurers involves considering the range suitable to supporting your business risk needs, their offerings and terms of cover, underwriting position and risk appetite. The risk assessment approach taken by different insurers varies, and it's important to select the right insurers for your business needs.
Large organisations and those with specific or hard to place risks benefit from access to a wide range of insurers from both local markets and overseas. London and Singapore based insurers can provide capacity for some types of risks that may be difficult to place with local Australia based insurers, so be prepared to seek out wider options from global markets and take a flexible approach to working with insurers that may be new to you.
Consider innovative ways of structuring your insurance program
The insurance market is always shifting, and highly responsive to claims impacts and events that alter the perspective on risk. Be open to working with your broker around pricing, deductibles and coverage.
With some risks, achieving full coverage from one insurer may not be feasible and in these cases it may be necessary to consider layering cover with different insurers. Layered programs can be built from a number of insurers providing cover in excess of each other's lower limits, creating umbrella coverage that protects your business with the level of insurance required.
Your insurance broker may be also be able to offer alternative risk transfer solutions for hard to place risks like supplementary parametric cover, or captives; these could be a valuable tools when the traditional insurance market has been restrictive.
As your broker we work to secure cover on optimal market terms
How much your renewal will be affected by market conditions will vary depending on your risk profile, claims record, approach to risk management and your broker's capability, but businesses should be prepared for renewals changes in premiums and other aspects of their insurance renewals year on year.
At Gallagher we work with a large variety of businesses, with unique risks, challenges and circumstances, including many businesses with hard to place risks. As a leader in risk management, we provide expert guidance in meeting insurer expectations through the renewal process, to access cover that achieves confidence in business risk protection solutions.
Let Gallagher be your trusted partner in navigating the evolving insurance landscape and your upcoming renewal, or consider a complimentary Gallagher business insurance risk review.
