| Situation | Response |
|
Broker warns you that you are going to get a sharp rate increase
on your primary property/casualty insurance. | If because of a large claim(s), make sure you know everything about the status/outcome of any large or potentially dangerous claims. Highlight facts in the case(s) in your favor. Involve your general or outside counsel as appropriate. Also, ask for quotes with high deductibles. If because of your loss ratio, compile loss and exposure history and calculate your ultimate loss ratio. Engage the services of a casualty actuary as appropriate. Rebut carrier's calculations. Review safety performance results and involve your safety manager — or an outside consultant as appropriate. Product/services or industry singled out for across the board increases? Gain an understanding of the large losses and loss ratios of your peers. If possible differentiate yourself from you peers. Seek advice of your peer risk managers and, as appropriate, available industry association resources. |
Insurance Company (ies) non-committal about your renewal. |
Review cancellation and renewal policy conditions and endorsements, especially state amendatory endorsements that often require that the incumbent insurance company must give you 60 days (120 days for continuous policies) of advance notice of their intent to not renew your policy. Prepare a contingency plan that includes requesting an extension of the policy and bringing in a competing broker. |
Large increase in your fixed cost workers compensation premium. | If your renewal premium is in excess of $150,000, study the feasibility of converting to a high deductible or retrospectively rated policy. |
Broker says they will be unable to maintain the expiring level of umbrella limits. |
Find out how much your peers are buying from a peer group survey conducted in your behalf by your broker or consultant. Utilize RIMS Benchmarking Survey data to establish where you stand. Be prepared to buy less insurance and let senior management know that you may be unable to purchase as much as you had before. Avoid multiple layers through different insurance companies. Try to buy as much as you can from a lead first-level umbrella insurer, preferably from your primary liability carrier and at least from an admitted company. |
You have a bifurcated property and liability program insured by different insurance companies — and one or both of them is either declining to renew or will only renew at a much higher rate. |
Consider switching to ACE, CNA, Chubb, Liberty Mutual, St. Paul, Zurich and other multi-line carriers that offer package policies. Consolidate your foreign package, inland marine and ocean cargo under the package. Get the package carrier to quote the umbrella, too. Make this as an opportunity to consolidate brokers, if you have two or more. Consider using this approach on your D&O, EPLI, fiduciary and crime programs. AIG, Chubb, Zurich and other carriers now offer executive risk packages. |
You are told that there will be a new exclusion on your policy or change in the coverage, such as a limited amount of earthquake and flood insurance. |
Make sure you and your broker are in agreement as to what you expect in regard to exclusions, sub-limits and other coverage specifications. Be prepared to accept the reality that there may be nothing you can do about . this. Communicate these realities to your senior management. |
The indicated renewal premiums will far exceed your budget. |
Look for ways to offset the increase. Consider buying reduced umbrella limits -- or reduce your rated exposures. Examples: Do you absolutely need to insure a) ordinary payroll on your business interruption insurance? b) a California property against earthquake for its full replacement value? c) the full hull value of a used aircraft? d) vehicles or airplanes that can be outsourced to a dedicated contract carrier? |
You are unable to buy a type of insurance or a surety bond that you absolutely have to have to conduct your business — because you must produce a certificate of insurance. |
Canvas the alternative marketplace for off-shore association sponsored captives, agency-owned captives, domestic risk retention and risk purchasing groups and group-sponsored self-insurance trusts. Your broker may be reluctant to steer you in this direction, because these "ART Market" vehicles often do not meet their minimum financial ratings. So, make your own inquiry by getting hold of the Risk Retention Reporter and Watson Wyatt's Captive Insurance Company Directory. Lastly, ask your broker about "under-liers," an insurance contract in which you indemnify . the insurance company against any claims that may be filed, and about "finite risk" insurance. |
Your current or last year's insurance company has had it’s A.M. Best Rating reduced. |
Review the status of all claim matters — including incidents — and press your broker to accelerate the closure of as many claims as practicable. If within six months of the anniversary date of you policy, start working on a suitable replacement. Note: Some excess policies become void if the primary insurance lapses or is cancelled. When the state insurance department takes over a company, protection against premature non-renewal and cancellation notices may be lost. Ask your broker to brief you on the state guarantee funds that may be available to you if the insurance company becomes insolvent. |
