Risk managers should start their renewal process early and manage their expectations, advises FM Global
As many industries grapple with the economic and commercial disruption of the COVID-19 pandemic, FM Global is offering key advice for risk and insurance managers for an effective renewal process with their commercial property insurer, to help meet the challenges posed by the changing market conditions.
“We have seen COVID-19 exacerbate a number of trends that were already contributing to a hardening of the commercial property insurance market, including various regulatory changes as well as the sector’s desire to return to profitability,” said James Galloway, executive vice president at FM Global.
“In light of the pandemic, the value of investing in risk mitigation should be more apparent than ever. Resilient businesses are more likely to prevent property loss from occurring in the first place and recover more swiftly should a loss occur. Additionally, risk selection continues to define a disciplined market and appropriate risk management investments could affect rates offered by insurers,” he added.
Risk and insurance managers approaching commercial property insurance renewals in these hard market conditions should look to the following advice to support the best possible outcomes:
- Start your renewal process early. The more time you allow for a deep-dive assessment of your potential property risk, the better results you will generally get, as you can understand which risks need to be prioritised. Starting the process early will also allow you to properly explore the options available and the most cost-effective and appropriate solution for your insurance needs.
- Manage expectations. Maintaining an open line of communication among all parties is key to ensure any potential changes can be communicated to decision makers in the C-suite as early as possible.
- Provide accurate submissions. Risk data quality, particularly values reporting, is one of the foundations of good underwriting. Underwriters lacking this information may be forced to assume a “worst case scenario” and quote a rate accordingly, or even decline to quote.
- Remember, resilience is a choice. Review your risk improvement strategy. Budgets for risk improvement might have tightened but having key sites out of operation due to fire or flood could result in significant business losses. Studies have consistently shown that companies which invest in loss mitigation can better react to periods of crisis and in the long term, gain a competitive advantage.