If you’re involved in the purchasing of your business’s insurance and you’re looking to secure more competitive cover at your next renewal. Read on to understand how you can put yourself in the best position to get competitive coverage and premiums.
The insurance market – what you need to know
How does the UK commercial insurance market work?
The commercial insurance market goes through cycles known as soft and hard markets. It’s these market conditions that in part drive the price you pay for your cover.
What’s the difference between a soft market vs hard market?
In a soft market, the insurance rates that underwriters use to determine the premium you pay are generally flat or decreasing, which can broadly mean that many premiums reduce and insurers are more willing to offer broader coverage. This is a favourable market for businesses. Conversely, during a hard market, premiums tend to rise, and insurers become more discerning about the risks they are willing to underwrite.
Preparation for your next renewal – 5 top tips
1. Start your renewal early
This allows you to explore your options well in advance, enabling you to make informed decisions about which carrier to select. Collaborating with your broker, you can evaluate both cost and coverage effectively. Typically, your broker will reach out at least two to three months prior to renewal, if not earlier. Together, you can prepare a comprehensive presentation that includes risk management provisions for all relevant insurers, which generally contributes to a favourable outcome at renewal.
2. Review your insurance coverage needs and number of policies with different insurers
Take the time to assess your business's insurance requirements. Consider any changes in your operations, assets, or liabilities since your last renewal. By understanding your specific needs, you can ensure that you have adequate coverage.
Additionally, you might want to think about working with a single insurer across multiple lines. Some insurers offer discounts when they’re on cover across multiple lines such as property, business interruption, and employers and public liability coverage.
3. Demonstrate a proactive approach to managing risk
Insurers consider risk management practices when assessing premiums and coverage terms. Safety protocols, regular risk assessments, disaster recovery plans and employee training programmes are all great ways to demonstrate your commitment to risk reduction. A history of frequent or large claims can negatively impact your premiums especially if you haven’t articulated the measures you have taken to stop similar claims from re-occurring.
4. Consider reviewing current excess or deductible levels
Depending on the type of coverage and your claims history, opting for a higher policy excess or deductible may help reduce your premiums. However, it's crucial to evaluate your financial ability to manage increased deductibles should a claim arise. Striking the right balance between cost savings and manageable deductibles is best achieved through a discussion with your broker.
5. Make sure you’re partnered with the right broker
Partnering with the right broker to best represent you in the insurance market is key. Should you be exploring your options for an alternative broker, make sure you ask about the service they can provide throughout the year in addition to the results they can deliver at your upcoming renewal. Avoid having more than one broker placing your programme as this can lead to confusion and gaps in coverage which could leave you exposed.
Approaching your renewal?
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As a trusted insurance broker for over 139,000 UK SMEs, we believe insurance shouldn’t be painful, after all, it’s there to protect you.
With our extensive industry knowledge and strong relationships with insurers, we’ll negotiate competitive rates and comprehensive coverage on your behalf.
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The information contained herein is based on sources we believe reliable and should be understood to be general insurance and risk management information only. The information is not intended to be taken as advice and cannot be relied upon as such. Statements concerning legal, tax or accounting matters should be understood to be general observations based solely on our experience as insurance brokers and risk consultants and should not be relied upon as legal, tax or accounting advice, which we are not authorised to provide.
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