For the last few years, the insurance market has been very competitive and buoyant, known as a “soft market”, but when an extended soft market has been in place for a few years this can negatively affect insurers margins and profit levels.
Spikes or surges in claims or global catastrophic events such as the coronavirus pandemic can lead to underwriting profits either reducing or drying up or losses being incurred, which is often the start of the hard market cycle which we are entering now.
As an insurance broker and preferred insurance partner of NCF, we wanted to give members some top tips on how to approach your renewal:
- Timing is key – ideally if your premium spend is less than £10k per annum, you should give yourselves a 45 day lead in time ahead of the renewal date and, if your renewal is above £10k, you should begin to start the conversation with your insurance broker at least 90 days before your renewal date. This is a critical point as insurers are asking far more questions and often requiring more detailed information. If you leave your renewal approach until too late, there may be no alternative options available in the time left.
- Available capacity – a number of insurers have left the health & social care sector, so may not be offering you renewal. Some indicators of capacity issues can include recent changes to customer service, such as brokers and insurers being unresponsive, lack of advice on claims, or claims not being covered.
- Pricing – you should always ask about any anticipated changes to current insurance spend levels. The market is evolving rapidly due to COVID-19 and one area that is seeing significant change is pricing, with double digit percentage rates increasing across the market, but particularly on liability covers
- Cover – check to see if any changes are being applied by your current Insurers. This could include extensions being dropped, and more onerous terms and conditions being applied. Many insurers are now totally excluding COVID-19 and communicable diseases cover under the public liability, so check if your insurer is one of those and what it may mean for your business
- Partnerships – always try to use a specialist broker, although most brokers can arrange cover for care providers. Specialist brokers in social and health care will have a wider reach in terms of solutions, stronger leverage and negotiating position with the specialists Insurer partners they support and work alongside. Specialist brokers will have stable collaborative relationships with partner markets during the softer market cycle and will be better positioned. While you may have seen significant rate reductions in the soft cycle which may be welcomed from a pricing perspective, in the longer term it is often those that saw the biggest rate reductions who will see the biggest rate increases when the market turns
- Flexibility – it is worth taking a look at available options, perhaps taking a larger excess or deductible, review limits of cover in place and maybe look at arranging the programme in a different way if possible. All of these may lead to more favourable options, as the more risk you are prepared to ‘self-insure’ should have a positive impact on premium pricing
- Benchmarking – speak with another broker and look to see what else may be available. Brokers often have exclusive arrangements with Insurers for sectors like social and health care and you may be advised by your brokers that a cover is not available; the reality is that it may be available, but maybe not from the Insurer markets that they have relationships with. Pricing has increased and cover has generally reduced ,but there is still competition from Insurers for what they see as the ‘right’ client
- Current Relationship – you may feel that you do not wish to possibly upset a good relationship with your current broker by looking elsewhere, but the reality is that all brokers know clients will undertake reviews for best value from time to time; particularly charities as they are obliged to do so, and such actions should not have a detrimental effect on your current arrangements
We have agreed through NCF to offer silent programme reviews and we have seen that this has been taken up by a number of members already. The market is evolving and this offers a real benefit to benchmark and assess the current arrangements and we can make appropriate commentary about what is being advised and what alternatives are available.
Towergate Caring Professions Division is a specialist in the health & social care sector with a number of exclusive arrangements that may suit your business very well and have been a supporting partner to NCF and members for many years.
How can we assist?
Towergate Insurance are partners with Care England, NCF, UKHCA and a number of regional associations, and are actively engaging with local Government officers to provide updates on market restrictions. We also work closely with the British Insurance Brokers‘ Association and the Association of British Insurers, to ensure that wider messages are being heard across the market.
To find out more about how we can assist you, or advise on market updates, you can call us on 0800 169 4616 or email [email protected]