In this market, you can’t afford to take a business as usual approach to your insurance renewal. In addition to rising rates and COVID-19 health concerns, businesses are having to implement new ways of working, which introduces new risks. This means it will likely take longer to complete your insurance renewal. Add the higher deductibles and lower limits being offered, and you may need more time to find an appropriate insurance solution. To help obtain the most favorable pricing and terms for your insurance renewal, here are some key considerations:
1. Start Your Renewal Process Early – Rates are increasing across the board, so engaging early with insurers will ensure you have enough time to prepare. Your insurance broker or agent should schedule a pre-renewal meeting with you 60 to 120 days out to discuss what underwriting information is needed and how to best present it. A risk assessment should be performed at this time to identify any new or changing exposures. This is particularly important now due to the various financial and operational impacts of COVID-19. Starting your renewal process early allows you to evaluate your risk and consider needs while giving you time to make the best decisions to protect your organization.
2. Address Outstanding Risk Management Items – If possible, close any open claims and take a moment to consider if there are any trends that might need further research. Your broker should be providing a loss history analysis and making recommendations to reduce future claims. Make sure you’ve implemented all risk control recommendations your broker or insurance carrier provided. Closing the loop on claims and risk controls will put you in the best position for your renewal.
3. Be on the Lookout for Changes to Policy Terms – Policyholders need to consider the implications of whether and to what extent they may have coverage for future communicable diseases or loss due to virus or outbreaks. Insurers are including COVID-19 exclusions into policy wordings. Some of these may include prior notice exclusion or prior known circumstances exclusions. Risk mitigation strategies to help limit your exposure to communicable disease include adding safety requirements, such as cleaning and sanitation frequency, to your company’s policies and procedures.
Due to the hard market, COVID-19 impacts and significant catastrophic losses in the past several years, insurers are imposing more coverage restrictions. Stricter policy provisions include adding sublimits, changing deductibles, enacting policy safeguard limitations and more. Review policies for these changes and try to negotiate better terms, if possible. Your insurance broker should be reaching out to you at least 60 to 120 days in advance of your policy renewal date and discussing creative solutions to ensure your organization is adequately protected at the most affordable cost.
4. Plan for Increased Underwriter Scrutiny – The sooner you begin preparing for your renewal the better position you will be in to address underwriter concerns. The hard market coupled with COVID-19 risks has resulted in additional questions and greater scrutiny from insurers. Be ready to address COVID-19’s impact on your finances and expected future impact, as well as how effective your organization was at implementing your business continuity plan. Underwriters will also want to know about payroll changes and loss history related to COVID-19 and overall. To put your company in the best position to negotiate, think about the top five emerging questions underwriters are asking during renewal and have your answers ready.
5. Explore New Coverage Options – Moving forward there may be new coverage for COVID-19 or pandemics, but it is unclear whether any insurers will use these forms and offer the coverage. It’s also hard to know if the premiums for pandemic coverage will be affordable.
You may also want to consider alternative funding in the form of a captive. A captive insurance company is an insurance entity that your business would own to provide insurance or risk protection to your company. Basically, it is a form of self-insurance that can provide financial benefits for qualifying companies.
Starting early on your renewal and performing the due diligence required will ensure that your company is not at risk for loss or damages. A proactive and detailed approach could be the difference between double-digit increases or exposure gaps and the most cost-effective protection.
For questions about your insurance renewal program, please contact us.
Looking for more COVID-19 resources? Visit our resource center for expertise on impacts to expect and how your business can respond.
Copyright © 2020 CBIZ & MHM (Mayer Hoffman McCann P.C.). All rights reserved. CBIZ and MHM are separate and independent legal entities that work together to serve clients. CBIZ is a leading provider of tax and consulting services. MHM is an independent CPA firm providing audit and other attest services. This article is protected by U.S. and international copyright laws and treaties. Use of the material contained herein without the express written consent of the firms is prohibited by law. Material contained in this alert is informational and promotional in nature and not intended to be specific financial, tax or consulting advice. Readers are advised to seek professional consultation regarding circumstances affecting their business.
