A Guide to Help You Choose with Confidence
The current property insurance market is characterized by increased pricing, diminished capacity, higher deductibles and retentions, greater underwriting scrutiny, and unfavorable coverage terms, which can create significant challenges for organizations that turn to insurance for the critical financial protection it provides. A recurring wave of severe natural disasters is one of the biggest drivers behind the hardened property insurance market, with these events leaving destruction in their wake.
With natural disasters growing in severity and frequency, replacement costs continuing to trend upward, and more people living in harm’s way, carrier losses have worsened, especially in recent years.
The bottom line—premiums could have skyrocketed for your business.
However, forgoing insurance is rarely an option. Big enough losses may force businesses to shutter their operations. Insurance can prevent this outcome from becoming a reality. After a natural disaster, the right coverage can provide critical financial recourse and access to resources that help businesses rebound.
Because of market conditions, working with your trusted broker can be the difference between finding necessary coverage at the best terms possible that financially protects the business and finding out that you were insufficiently covered after disaster has struck.
Our team of experienced advisors is dedicated to maintaining meaningful relationships with our clients, building strategies that help protect their assets and investments, and helping them successfully navigate a hardened property market.
In today’s environment, your loss history and evidence of loss control tactics matter more in the underwriting process. We take the time to earn our clients’ trust and learn the ins and outs of their organizations. This enables us to engage with all levels of their business to create a resilient risk management program that decreases the likelihood of an uncovered loss and helps them recover should they experience a triggering event, like a natural disaster. Our advisors can help clients create a narrative of their risk that highlights the proactive measures they take to prevent claims from happening so that carriers provide more favorable terms for coverage. This ultimately results in the potential for improved insurance costs.
Though a challenging insurance market and economy highlight the importance of working with the right broker, the value add of your broker relationship has benefits that are valuable at any given time.
Selecting & Working with a Broker
A Relationship that Delivers Results
The impact an insurance broker makes takes many shapes and forms. From helping clients select adequate coverage and limits, to determining which loss control tactics to invest in, and guiding them through the claims process, businesses rely on their insurance broker to help protect their operations and assets.
The insurance environment is complex and always shifting, so trustworthy guidance and thoughtful approaches to managing risk are imperative to help protect your business and employees. An ideal partnership between you and your broker aligns business priorities and goals to ensure you make meaningful investments in risk management and insurance programs by providing answers to the following questions:
- Which risks are we most susceptible to, in terms of likelihood of occurrence and financial impact?
- What factors increase the likelihood of our organization experiencing a loss?
- How can we manage these risks through investments in loss control or risk transfer?
- What are the financial consequences of failing to remediate these risks?
Your broker should be comprised of a team with proven experience that regularly communicates with each other, as well as with you, regarding industry updates, changes in your unique risk situation, and more.
The right broker will help you:
- Stay informed about changing market conditions
- Avoid over-insuring assets
- Identify gaps in coverage
- Manage the renewal process
- Increase possibilities of premium discounts
- Maximize the benefits of your coverage
- Provide claims advocacy support
EYE-WITNESS AFTER A DISASTER
See our claims advocacy in action – watch a quick profile of our response for a Commercial Risk Management client after Hurricane Ian in September:
A BROKER’S RESPONSIBILITY
Whatever your business’s unique exposures might be, a broker should serve as an intermediary between you and insurers, best represent your risk profile to underwriters, and leverage relationships with carriers so that you get more favorable terms for coverage. And your relationship with your broker shouldn’t be a game of “now you see me, now you don’t” wherein you only hear from them when it’s time to prepare for an upcoming renewal.
Beyond checking in solely to prepare for the renewal process, your broker should also provide resources and support throughout the year:
- Keeping you abreast of market changes
It’s your broker’s responsibility to keep up with developments in the insurance market and monitor market conditions. They need to understand how different carriers’ underwriting standards evolve over time in case these changes impact your ability to find coverage. Because there are a lot of options in the market for different lines of insurance, your broker should be constantly learning about these developments directly from carriers and inform you, especially in circumstances where your coverage might be affected.
- Leveraging carrier relationships
Insurance isn’t always black and white, so you need someone on your team who can navigate placements and exceptions, and work through the intricacies of underwriting guidelines. This is especially crucial for clients with more complex risk profiles. When your broker has cultivated effective relationships with insurers, this puts them in a better position to negotiate policy terms on your behalf.
- Identifying and communicating new exposures
Your broker should have the education and technical acumen needed to understand your business’s unique risks. If there are emerging risks due to socioeconomic and environmental conditions, your broker needs to be able to forecast how the market is trending and communicate this information to you. When your broker anticipates emerging risks and keeps track of market changes, they’re able to educate you so that you can make an informed decision about how you can use insurance for financial protection, and which steps you can take to minimize your exposure to risks. The ability to provide this service is especially important as it relates to complex emerging risks that might require more preparation on your end to understand and triage.
- Assisting with claims management
No one wants to have to use their insurance, but if you need to open a claim, you’ll want your advisor’s support and guidance. This is also when your broker’s relationships in the market should prove themselves to be valuable. Your broker should be working with carriers who have a positive claims management history so that you’re less likely to have negative experiences down the road. Additionally, your advisor should serve as a claims liaison between you and the carrier. They should advocate on your behalf and monitor the claim to ensure that it’s processed promptly. When the adjustment process doesn’t fully make sense, your broker can step in and communicate with the adjustor on your behalf and let you know what factors are impacting your claim.
- Conducting risk assessments
To minimize your risk, you’ll need to understand which exposures you’re facing. And with a constantly evolving risk landscape, it’s up to your broker to proactively determine what these risks are, as they arise, throughout the year. Depending on the complexity of your risk profile, they can conduct midterm or quarterly meetings with you where they can ask questions that help them learn how and if your risk profile has changed.
If you have claims history, your broker should conduct a claims analysis so you can determine what you need to do to prevent similar issues from arising in the future. Conducting a claims or risk analysis and determining a corrective course of action also make your risk more defensible in the eyes of carriers when you approach your renewal.
- Implementing risk management strategies
Once your broker helps you obtain a full understanding of your risk profile, they should help you determine a course of action to minimize it. This can come in the form of trainings, connecting you to resources, conducting risk management exercises, and rolling out safety initiatives. Implementing risk management strategies has many benefits, including a decreased likelihood of claims, which in turn makes you more insurable in the eyes of carriers.
- Communicating proactively
Your broker should communicate with you regarding their offerings and information about different policies so that you understand how they can help. When your broker facilitates open communication, this helps you become more educated as a consumer and allows you to see that your broker is invested in their relationship with you.
- Providing specialized expertise for your needs
The broker you choose to partner with should have highly specialized knowledge to address your unique needs. They should peer review your policies to determine if there are coverage gaps or room for improvement. The entire brokerage team needs to understand the operational risks that come from your specific industry. When assessing your risk profile, your broker should ask you thought-provoking questions that indicate they understand the exposures that come with your line of business.
- Learning and understanding your goals and core values
Your needs, goals, and values are likely to change over time, and it’s your broker’s job to learn this information and adjust their approach to the insurance purchasing and risk mitigation process accordingly. An effective broker will form their strategy around your business goals.
PROSPECTIVE BROKER CHECKLIST
Regardless of your company’s size, industry, operations, culture, and goals, asking more questions during your selection process can help you see how all the pieces fit together and ensure you’re partnering with a broker who has your best interests in mind.
As you begin speaking with brokers, consider the following list of questions you may want to cover.
Communicate to the broker that cost-effectiveness is important to you, but without compromising coverage needs.
- Do they review and analyze existing coverage?
- How do they determine what type of insurance is needed?
- What do they do to address exclusionary language and restrictive sublimits?
- What does their risk assessment process entail?
- What do they do to market and present the risks to carriers and how proactive are they?
- How will they structure our insurance and risk management program?
Let the broker know you want to see the types of carrier or global broker network relationships maintained, whether local, regional, or international.
- How many carriers do they have access to within their network?
- What do those relationships look like?
- Do they have a global footprint, and how do they handle international exposures when locally admitted policies are required?
Placing coverage varies from industry to industry because the risks can differ greatly. Ask the broker how they have advocated for clients in your industry.
- Do they have a team specialized in your industry?
- How long have they worked with clients in your industry?
- Can they identify key exposures your organization faces?
- Can they provide specific examples of how they’ve advocated for clients in your industry?
- Do they have specialists who can help your company develop training programs to minimize risk?
- Can they speak to other specialized experiences they have related to this industry?
You want to make sure a broker will be responsive and provide the level of support you need if you have questions or a claim arises.
- Which team will service my account?
- Will I work with the same, top-tier team for the duration of our relationship?
- Will a team be dedicated to servicing my account? What is your team’s experience?
- What does your submission process entail?
- How will you support us during the renewal process?
- What do you do to support clients in the event of a loss?
- Do you offer claim reviews once a claim has closed?
- How accessible is your team via phone and email?
- How do you handle transitions between carriers?
- Can you provide references?
- What additional services do you provide?
Breadth and Depth of Resources
Take into account all the ways your broker can help you as your business evolves.
- Does your broker have access to a large network of resources to support your growing needs?
- What self-service resources are available for clients?
- What technology strategy do you have in place to support the growing needs of clients and the ever-changing insurance landscape?
Loss Control Strategies
Get clarity on any type of online safety programs or tools or other loss control prevention strategies a broker provides with the following questions.
- Can they provide you with competitive benchmarks to strive for industry alignment?
- Are they experienced in structuring alternative insurance program structures to lower the cost of coverage?
- Which loss control resources do they have access to, and how can this help improve outcomes for your organization?
While the past years have been characterized by a number of challenges, including the hardened property insurance market, this is your opportunity to maximize the benefits that you can get from your broker relationship.
Your insurance broker should provide value for your business in the following ways:
- A broker’s relationships with insurers are vital to helping you during the negotiation process for coverage.
- Work with a reputable broker that looks at your total risk exposure and works with you to minimize it.
- You should hear from your broker at numerous touchpoints throughout the year to ensure they are aware of any updates to your risk profile and keep you informed about changes in the market that may affect you or your business.
Organizations that need help navigating the complexities of insuring their assets in disaster-prone areas should lean on experts who have proven success in helping clients get the coverage they need, even in a hard market. Now is the time to look at your broker relationship and see if it’s delivering the value you deserve.
Our Advisors take the time to understand each client’s specific needs, review their unique circumstances from a 360° vantage point, and provide practical steps that help build and maintain a risk management program that evolves in lockstep with your needs.
Contact us today to learn how we can work together to protect your now and your future.
Interested to learn more about the state of the Commercial insurance market and the prospects of continued rate increases? Visit the “Making a Soft Landing in a Hard Market” website from BRP.
This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The content of this document is made available on an “as is” basis, without warranty of any kind. Baldwin Risk Partners, LLC (“BRP”), its affiliates, and subsidiaries do not guarantee that this information is, or can be relied on for, compliance with any law or regulation, assurance against preventable losses, or freedom from legal liability. This publication is not intended to be legal, underwriting, or any other type of professional advice. BRP does not guarantee any particular outcome and makes no commitment to update any information herein or remove any items that are no longer accurate or complete. Furthermore, BRP does not assume any liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Persons requiring advice should always consult an independent adviser.
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