To gather the necessary information, the insurance buyer should organize a team to help gather the prospective sales, payroll, values and other exposure information. Risk managers should be updated on the status/outcome of all large or potentially dangerous claims, analyze loss trends, and be familiar with statistics such as the calculated loss ratio.
Meanwhile, the broker needs to find out what information prospective underwriters will need. The broker should order and review the loss runs, and help the risk manager identify the specific claims and suits that might be of interest to underwriters.
The broker should also engage technical staff, including actuaries if appropriate, to project losses.
During the soft market, the customer and the broker had the upper hand, but this is no longer the case. While costs are going up, coverages are being watered down. For example, we heard from a risk manager whose flood coverage extension excluded losses below street level.
As they approach the due date for the delivery of the renewal quotes, risk managers might need to adjust their expectations as to the outcome of the renewal process. They should prepare by determining what coverage the organization can buy less of, or even do without.
Risk managers should have benchmarking data available, and they should look for opportunities to avoid risk through outsourcing. They might even want to discontinue certain business activities
The meeting ended with a Q&A session in which we learned that he is not too high on enterprise risk management, that transparency (as to where their money comes from) does not create value but that Aon will not accept contingent fees and that Aon is not (like Marsh) going to abandon middle market accounts. We were not surprised to see our former colleague Walter Thomenson rise in defense of Intego, when Mr. Case debunked the idea that Intego is advantaged because it has no legacy (of Spitzer and other enforcement actions against it.)
As he said at the beginning of his presentation, "clients will separate the winners from the losers…" We felt that he really meant this — and that he was not just tipping his hat to this audience which included a lot of experienced and discriminating risk managers.
For those who would like to learn more about getting better value our of their insurance broker, visit our Insurance Broker Selection Service page. We may be able to help you put a new face on the broker who serves you.
