3 Steps To Minimize The Impact Of A Hard Insurance Market
The insurance market can at times, be a tough nut to crack, especially when it fluctuates from a soft insurance market to a hard one. When the hard market drops, we see insurers tighten underwriting criteria, coverages become more difficult to secure, premiums aren't as easy to negotiate on and coverage when it isn't expensive, can become completely unavailable.
Preparation is the key to success, and while you can prepare yourself for some rate increases in the next few years, it's often better to take a more proactive approach.
The following three steps will help you minimize the impact of those stringent insurance rating criteria.
1 - Understand the Importance of an Insurance Broker during a hard market
Following advice will only get you so far if you don't understand why you're doing what you're doing. Insurance brokers during a hard market will become your saving grace. Their role is to fight your battles and continuously source competitive services to suit your needs.
In a hard market, it can feel like an insurer is attempting to block your every step with their stringent standards, so having an insurance broker that understands the changes and is prepared to seek out the best result for your business, can ensure your policy will be tailored to your needs and remove the burden from your own shoulders.
This not only makes the process smoother but allows you to focus on your business and do the job you know how to do best, saving you time and frustration.
2 - Develop a good relationship with your insurance broker
Teamwork makes the dream work and a great relationship with your insurance broker will only result in the best outcomes for your business. An insurance broker can only work to the best of their ability if they understand what you want and are hoping to achieve. If either you or your broker aren't on the same page, it might be best to try another book.
Make sure that your insurance broker understands the impact of the hard market on your business and that they understand your actual business, the industry and its potential risks. A hard insurance market brings new clients to brokers, so take advantage of the competitive arena and make sure your broker has proven their capability to you, above all the rest.
With the right broker and a trustworthy partnership, you will be guaranteed to receive the best price, coverage and policy to secure your business' future.
3 - Prepare the business for increased insurance costs
"By failing to prepare, you are preparing to fail." Benjamin Franklin Being aware of the potential for increased insurance costs isn't the same as actually preparing for the occasion. Insurers need to be proactive and commence their renewal process early to ensure the best outcomes. Present risks in the best light and allow adequate time to address any surprises or consider strategies which may mitigate premium increases, such as increased deductibles.
It can often become a shock when the market turns and many find themselves mentally unprepared for the sudden shift. Pre-emptive action is better than reaction, so prepare your business early.
It's understandable to start sweating at the mention of insurance premiums on the rise, but there's plenty to start considering, planning and actioning now to prepare your business for the worst. Taking an active and strategic approach to managing your company's risks and insurance claims will minimize the impact of a hard insurance market, so it's best to start sooner rather than later.
I offer a 30-minute business review session. During that session I provide my advice on if and how I can help you minimize the impact of a hard insurance market.
Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by Brett Thiedeman.