Start renewals much earlier in a harsh market, members urged
Risk managers must prepare and engage much earlier for their renewals in a harsh market, members heard in a webinar, jointly hosted by Airmic and Commercial Risk.
Initiating the renewals process four or six months in advance is "not enough in this market", according to Scott Feltham, group insurance manager at Compass Group, who has already been through two renewals since the market started to turn. "You need to be looking at engaging eight or nine months prior to renewal," he advised.
Noting that the market is becoming more demanding in terms of the data they require, he added: "Give information early in the day so you don't get any late surprises. You want to receive the terms three months prior to renewal to have the time to take stock of what they mean for you."
Engaging early will also play to the advantage of organisations with strong risk management. According to Thomas Harris, senior underwriter, commercial institutions, at AIG: "We take a lot of value in sitting down quite early in the process with brokers and our customers to understand and drill down in some of the areas we'd like to get more understanding of. We're trying to get the point across to clients that we do still differentiate clients, and this is not a fruitless exercise."
Have a Plan B
Risk managers have reported more challenging renewals in some lines of business in the past year, including price rises, reductions in scope of cover, restrictions in limits of indemnity, and last-minute changes in terms, observed Adrian Ladbury, director at Commercial Risk, who chaired the webinar.
Early engagement internally is therefore also important for managing the expectations of the business: "Meet with the CFO, and board if possible, early on," advised Mr Feltham. "Have a conversation about the company's risk appetite, set against the backdrop of the hardened market…get them to buy in to what you're thinking."
Insurance managers should also put in place alternative arrangements, according to Sarah Horler, partner at Lockton: "Have a plan B and even a plan C so if it does go horribly wrong, you're not left waiting or having to have very messy talks."
Be prepared and informed
The challenging renewals environment provides an opportunity for Airmic members, according to Julia Graham, Airmic's deputy CEO and technical director: "It's a chance to shine. To take a forward step rather than a defensive step. It's a chance to show your brokers, insurers and your organisation that good risk management makes sense and it should be rewarded."
Preparation is key, she stressed. "The most important thing to remember is know what you're talking about…Be prepared, knowledgeable and informed. Then start to build your knowledge, influencing and negotiating skills."
Captives in the spotlight
The hardening market is putting the spotlight on captives, members heard. The prolonged soft market had made it harder for captives to justify their purpose, but many members are now "pretty relieved" they still have their captive, according Richard Cutcher, Airmic's research and development manager, and chairman of Airmic's captive special interest group. "Some members are currently forming captives and the harsh market is a factor in that," he added.
Airmic will shortly be issuing advice to members on navigating the harsh market.