Risk Insider: Bob Black
Seven Tips for Optimizing Property Placements
Property capacity is abundant for commercial and residential real estate placements. Existing carriers often offer to bolster their capacity, while new carriers enter the marketplace and aggressively compete for business. The response from carriers: Reduced pricing and broadened coverage.
Here are seven tips for risk managers to help navigate a softening marketplace while securing optimal coverage for your placement:
Avoid Complacency: Partner with a retailer who has full market access and market clout, both directly and through your retailers’ wholesale intermediary.
Require a detailed marketing summary from your retailer, inclusive of all carrier responses, and here’s why: This approach generates favorable results for your placement. It also minimizes the chance of being blindsided by other risk managers utilizing markets your program does not utilize or offering more robust coverage than your program includes.
Improve and Streamline Coverage: Request deductible and sublimit improvements, broaden the manuscript form and ensure concurrency within the program. The improvements that are secured may prove to be more valuable than any rate relief that is achieved.
In numerous instances lately, we have seen success with reducing named storm deductibles, thereby providing insureds with balance sheet protection in the event of a future loss.
Reshuffle the Deck: Many carriers impose limitations on the rate decrease they will authorize for an expiring layer, despite a marketplace that may support a larger reduction.
The solution? Focus carriers on a “new” layer to ensure there’s no expiring layer price used for baseline purposes.
Maintain a Diverse Carrier Mix: Sure, your retailer can reduce the number of carriers needed to complete a placement in a softening market; however, they should resist the temptation when possible.
This strategy is both defensive and offensive. Your organization will be less dependent on any one carrier and will be well-positioned when the market tightens.
Facilitate Lasting Underwriter Relationships: For larger layered placements, ask your retailer to schedule face-to-face underwriter meetings.
This approach allows you to showcase your organization to the marketplace, differentiating your business from the vast majority of insureds that do not capitalize on this opportunity.
Risk managers that invest in this important step will realize a more favorable renewal result when the marketplace hardens or after a meaningful loss.
Reap the Rewards of a Detailed, Accurate and Timely Submission: Your retailer can best market your account with a detailed and accurate submission.
Underwriters will aggressively price an account or provide broader coverage when uncertainty is removed or minimized. Also provide your retailer with as much lead time as possible, positioning them for marketing success.
Things to include in your submission: detailed SOVs (inclusive of roof replacement age and other secondary data for wind and hail-exposed accounts), updated loss summaries, mapping or pivot tables to show aggregations, coverage specifications, manuscript form, RMS modeling results and target layering/pricing.