I was fortunate in many ways to start my career in insurance (and at Proclaim) in 2004 in what was the dying days of the last hard market. That is a long time at one employer in today’s terms, but also a long insurance cycle as the current market mirrors, in many ways, those conditions. Certain risks are all but un-insurable and many are facing premium rises that range from sharp to alarming. Often renewal is only available, if available at all, with significantly higher excesses.
In a series of seminars I have looked at how brokers might best assist their clients in this market. The key message is that brokers need an understanding of their client’s claims experience, and correspondingly, their risk profile that is at least the equal or better than the insurers from whom they are seeking cover. Detailed analysis of claims experience including key causes, loss development patterns and latency is difficult without a good claims system supported by the appropriate expertise. Anyone trying to manage a claims portfolio out of an Excel spreadsheet will not be able to best represent their clients interests and really ‘sell’ the risk to Underwriters.
Whatever the class of insurance – a large excess is a significant risk to a business – not only because of the balance sheet exposure and the cash flow challenges it may pose, but also because claims not handled well within the excess can easily blow out and potentially lead to a deteriorating claims profile. Best practice claims management means a keen focus on early triaging, an emphasis on (preferably early) resolution, and an integrated claims management process. A common pitfall we see is a model where the insured makes courtesy calls, the broker/in-house counsel/ HR manager tries to manage claims under the excess and then the insurer and/or lawyers are called in when things get difficult. This inevitably leads to confusion, lack of consistency, and ultimately leakage. It also means there is not one source of truth when it comes to the broker or insured really understanding the claims experience. This is a time for brokers to really tell a story and sell insurers on why they should want to underwrite their clients.
The next two to three years will be a challenging time but also a great illustration of the value brokers and specialised claims management provide.
If you have a client with a significant excess and/or a distressed claims experience talk to Proclaim about how we can help!
By Richard Thomas, Proclaim National Manager – Insurance
If you would like to find out how to attend Richard’s Broking in a Hard Market seminar, you can contact NIBA who will be hosting the seminar in Geelong 18th of October this year, or contact us directly at firstname.lastname@example.org to arrange a time.