Author: Brandon Cole
In this challenging insurance market, getting creative is the key to achieving the best results. It's time to become the master of your property information, evaluate prior claims and take calculated risks to reduce your total cost of risk.
Become the master of your property information
In the past, underwriters often accepted partially complete applications or statement of values with missing information.
Those days are gone.
Underwriters have more business than they can handle, and the organizations with the best information are seeing the best results. Providing detailed information on building updates — including roofs, plumbing and electrical — is key.
Underwriters are also becoming more granular on the values being used for reconstruction costs and business interruption limits. Working to get values to meet modern reconstruction costs can be painful from a cost perspective, but have a plan for increasing values every year to get to up to market. Underwriters are surcharging or developing their own calculations on the reconstruction costs, which is most likely going to be far more conservative than you'd come up with on your own.
If you haven't done a business income calculator now, is the time to look into doing it. Underwriters will limit coverage or require a business income calculator to bind coverage.
Evaluate prior claims and how to prevent similar situations
More and more nonprofits are having large claims, including claims related to Employment, Sexual Abuse, Automobile and Property policies. The frequency and severity of these claims are causing insurance companies to pull back on coverage, increase deductibles and increase premiums.
Nonprofits should review claims to see what they are doing or can do to prevent similar claims in the future. You should be prepared to write a brief statement on any claims, telling your story about your plans to help prevent these situations from happening again. Otherwise, insurance companies will see these large claims and take a pass on your coverage.
Take more risk
With the prevalence of higher than average premium increases this year — on top of steady increases for the last several years — we're seeing more organizations looking at taking on more risks. This strategy can include taking higher deductibles, and joining captives or forming risk pools.
- Higher deductibles don't always translate into great premiums savings, but they can give you more control over your claims experience and help keep small claims off your claims history — which helps make your insurance more attractive to potential insurers.
- Nonprofits are starting to look at joining insurance captives and forming risk pools. These types of arrangements haven't been popular in the past, but with budget-busting increases, organizations have to get creative and look for other ways to manage their total cost of risk.
Consider bundling — or unbundling — insurance policies
Bundling coverages — like Property and Workers' Compensation — or placing several insurance coverages with the same insurer can bring substantial savings.
But in some cases, pulling apart bundles can result in better coverage, lower retentions and better premiums. For example, look at moving Boiler and Machinery coverage off your Property insurance and into a separate policy. Consider splitting up the Board, Employment Practices, Crime, Cyber and Fiduciary policies.
