We have just emerged from one of the longest soft markets in recent history where premiums were low and insurers were actively competing for business. Many companies took full advantage of the insurer’s oversupply of capacity and their aggressive pricing strategies by saving thousands in insurance costs. However, market conditions are beginning to deteriorate as commercial insurance rates continue to climb and catastrophic losses become a daily occurrence.
While some say the current marketplace is nowhere near what has been known to be a hard market, we are now in an obvious state of transition. Carriers have become extremely disciplined with stricter underwriting guidelines, rate increases and coverage restrictions. While insurance companies offer less coverage for more money and a true hard market is in our near future, risk management remains one of the only ways of reducing your Total Cost of Risk (TCoR).
Profitable loss trends and effective management of risk will be an underwriting requirement and become a necessity to obtain a fair premium. Effective risk management can be the difference between a 5% and a 30% increase at renewal time. In other cases, it may be the only way to keep your current insurance carrier as insurers are no longer interested in aggressively writing business and cutting premiums; they are now demanded to write profitable accounts and “clean up” their existing business by non-renewing customers who are performing poorly.
The best way to keep your Total Cost of Risk down in a hardening market is to mitigate losses and identify risks. It is important to engage your organization in strategic development processes and implementation of risk mitigation procedures. Seek consultation from a competent Risk Management team who will advise your firm and understand your unique circumstances and needs. It is critical to involve a professional that recognizes your concerns and can assist in the creation and management of an internal task force that focuses on loss prevention and safety. Don’t wait until you feel the pressures of the hardening market impact your company’s bottom line.
If you would like to learn more about how to stay ahead of the changing market conditions please feel free contact our Albert Sica at 732.395.4251 or at [email protected].
