For many business leaders, the end of the year also means it’s time to renew your insurance policies. With continued inflation and the possibility of an upcoming recession, it’s no secret that many organizations are starting to tighten budgets and cut costs wherever possible.
We want to share the following four tips to help you prepare for upcoming renewals and make the most appropriate decisions for you and your team.
- Prepare yourself (and your team) for the possibility of higher costs. The reality of the property & casualty market is that there are no magic levers. A decrease in premiums often means higher retentions or more restrictive policy language for the insured. Also, keep in mind insurance claim payments go towards the same things that are being hit by inflation – medical bills, automobiles, construction supplies, etc. These are all more expensive because of inflation, and insurance companies are paying for the same goods as everyone else.
- Start conversations with your insurance advisor ASAP. We begin working on renewals halfway through the policy period. This may seem excessive, but it allows everyone involved the opportunity to discuss foreseen challenges due to losses, changes in the market or new underwriting trends. Proper planning and communication help prevent any shocks and provides you with enough time both to build out and consider additional options.
- Gather the necessary data. Our advisors ask for lots of information throughout the renewal process because we believe the most effective way to represent any client is to fundamentally understand their business, their risk profile and their risk appetite. Having accurate data is essential to this philosophy, so it’s good practice to start collecting changes to inventories, property/assets, payroll, etc. so that your broker can update your records and relay any significant shifts to the underwriters.
- Complete any needed repairs and property maintenance. Performing regular maintenance of your facilities and equipment can help set you up for a successful renewal by showing the insurers that you’re mitigating risk to the best of your ability.
The most important role your insurance advisor plays is in being able to paint an accurate picture of your operations and risk to the insurance carrier(s) so they have a true understanding of your assets, as well as your proven risk management strategies. If they don’t understand what you have, you’ll likely suffer a higher insurance cost by means of either higher premiums or lower coverage limits.
This is why preparation and communication are so critical to the renewal process. We understand that insurance is almost the last thing anyone wants to talk about but given the current financial climate, it’s unwise to avoid it. So our advice is to start the conversation early – reach out to your broker and gather as much information about your assets, risks, etc. so you can start the next cycle with a robust (and affordable) insurance program.