Paint a picture

Way explained that there are two pieces to providing a compelling presentation to the marketplace at renewal time. You need to give the underwriters key data, including spreadsheets, statements of value, and risk factors. But you also need to address the softer side of your sales pitch. Remember that the underwriters are people, he said, “and if you get their attention with something compelling it can only help you.”

You should articulate your renewal goals, objectives and expectations, Wert said. This helps to give the underwriter a better understanding of what your company does, what risks you’re looking to insure, what your goals are with the current renewal and what you expect from the underwriter in setting rates and determining level of risk.

Provide information about rating factors

The more information you can give underwriters about the rating factors they look at the better. These major risk factors include:

• Construction of your building(s). Wood construction is obviously going to be rated differently that concrete construction. Underwriters also look at the year the building was built; occupancy, including the kinds of operations in the building; protection, such as sprinklers, fire escapes, or levees; and exposure to flood risks for example.
• Business operations. Describing your business operations gives you a chance to explain the things about your company that you’re proud of, Way said. “You’re selling what’s different about what your company does, and why an underwriter might want to get excited about working on your particular account.” You also should include contingency plans in the renewal package. The more prepared you are to manage a potential loss event, the better you look to an underwriter.
• Amount subject to risk. You need to explain your typical exposure footprint to the underwriter, and consolidate information as much as possible. Using a retail chain as an example, Way explained that both sides save time if the retailer can say to the underwriter that it has some locations that are freestanding and some that are in malls, as well as some warehouses that are more remote. “Now, you’ve taken hundreds of data points on spreadsheet and boiled it down to a couple of paragraphs,” he said. Adding photographs of selected locations also will help the underwriter understand your needs better.
• Catastrophe exposure: earthquake, flood and windstorm. You need to focus attention here whether you want to or not, because underwriters always will consider the risk of these natural disasters. If you’ve had losses due to flooding, for example, be sure to talk about the loss history; don’t hide it. “This information isn’t necessarily a negative,” Way said. By including the loss history, you have an opportunity to talk about the things you’ve done to reduce chances that you’ll have future losses. Generally, he said, underwriters believe that clients who have had bad experiences “have gotten religion.” Such clients are better at future mitigation and likely to be better at managing risk going forward.

Model primary and secondary risks

Modeling companies—like AIR and RMS—take your data, including your statement of values, and crunch the numbers, Way explained. The result of that number crunching influences the rate you can expect to pay for your coverage.

“The more data you can feed into the machine,” Way said, “the better your results will be almost 100% of the time.”

Analyze your position

Wert added that renewals are about price as well as the terms and conditions that you want and need. He recommended that companies start the renewal process by conducting a renewal strategy meeting with the property team. You should focus on the technical issues, including risk assessment, first. Then move on to industry benchmarking. It’s valuable to know where you are in relation to your industry peer group regarding the type of coverage that you’re buying or looking for.

Your analysis should review your risk appetite and how it relates to your risk profile, exposures and retentions, Wert said. When you have that information, you’ll know how you want to structure program from the deductibles and limits standpoint.

He added that loan covenants may govern your approach in setting limits, determining the deductible, and deciding on retentions as well as carrier selection based on carrier financial ratings.

Leverage relationships

A mistake many organizations make is that they look at their insurance coverages in silos. Wert recommended that companies leverage their relationships with carriers on the other lines of coverage. Brokers may be able to obtain more favorable rates with some carriers if they’re placing multiple lines of coverage. At the very least, you should ask.

Choose a specialized team

When you’re putting together the team to represent you in the marketplace, you should have a property team with specialization in your industry, Wert said. The members representing your program should include someone with advisory/technical experience, others with placement expertise and knowledge of the marketplace, those with knowledge of carriers’ strengths and weaknesses, and those with expertise in loss prevention and risk consulting advocacy.

Globalize

Access to the worldwide marketplace is key to finding the best market for your organization, Wert said. There are three distinct developed markets: North America, London and Continental Europe, and Bermuda. They can be in different parts of the market cycle at a given time, but right now all segments and market areas are in the same cycle.

Wert indicated that there is a fourth market developing in Asia and this market can play an important role in certain types of placements. “If your placement is large enough,” he said, “it’s best to leverage each marketplace to create competition and capacity.”

With these tips in mind, your next renewal cycle should go more smoothly and might even result in more favorable rates.