Preparing for a "Different" Market

Insurance premiums have been decreasing for years due to minimal losses and stable returns from investments. However, this years disasters already include: floods in Australia, an earthquake in New Zealand, Japan’s earthquake and tsunami, multiple tornadoes and record flooding in the US. Many insurers have already gone through their reserve funds and have started accessing re-insurance policies. To make matters worse, there are predictions that the 2011 hurricane season will be above average.

The days of double-digit decreases may be over and the market may be showing signs of hardening. A hard market is not a great environment for the policyholder. However, there are some things a company can do to best position themselves from a potential market change:
-Compute your Probable Maximum Loss (PML). Many carrier use models based on default settings and the PML you are being charged for may be higher than what it actually is.
-Review and update your business continuity plan. Statistics show that those companies without a plan (or an outdated one) have a slower response time and higher costs than those with an up-to-date plan in place.
-Is your insurer purchasing facultative reinsurance? If so, what are the terms of that deal? How much are they reinsuring? What does it cost you? How are you being presented to the marketplace by your broker?
-Find out if there are any outstanding recommendations from a rating agency (i.e. ISO) or your insurer that may result in lower rates or higher credits. Compare the cost of implementation with the potential premium savings to see if your return on investment would be worthwhile.

Being “Proactive” instead of “Reactive” with regards to your risk management program will put you in a better position should the market decide to shift.

Contact me to learn more about our “ProAction(TM)” process.