Your insurance market engagement strategy

03 January 2019

The food and agri sector has been thick on capacity and thin on rates in recent years, but there are signs that change is afoot. To avoid being caught out, companies need a robust insurance market engagement strategy to retain access to the cover they need.

MARKET IN FLUX

A number of company market insurers are readjusting their underwriting appetite, as they seek to improve their combined ratios. Similarly, numerous Lloyd’s syndicates have been threatened with closure if they do not come up with plans to reach or return to profitability.

If these syndicates are placed in run off and other insurers withdraw from the market, there is only one direction in which rates and availability of cover will travel. These moves are not restricted to carriers writing food and agri business, but there is little doubt shifting insurance market dynamics will impact companies in the sector.

MANAGING AND DEVELOPING RELATIONSHIPS

Food and agri companies must have a strategy in place that reflects these developing changes and provides access to alternative market or risk going to the market cold, weakening their negotiating position and reducing their options. They cannot wait until existing covers become unavailable or too expensive before hatching a plan. To avoid this scenario companies that buy most of their insurance from a single carrier could hive off parts of the programme and place them with other insurers.

This strategy ensures the insurance buyer can build relationships and understandings with multiple insurers, facilitating Plan B placement options.

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GETTING THE MOST OUT OF RISK PRESENTATIONS

Prior to renewal, companies complete a significant amount of work to detail their risks and demonstrate their loss prevention and mitigation strategies. This can be used to prospect other potential insurers for the future.

Companies can then assess insurer appetite and get a feel for whether working with a new insurance provider would be a good fit for both sides.

Should cover from an existing insurer not be forthcoming at subsequent renewals, negotiations are already underway with alternative markets making it more likely that a mutually beneficial agreement can be reached with new underwriters.

Nothing, , lasts forever. This in itself is not a reason for change, but it should be a powerful driver to develop a more robust engagement strategy with insurers. In an uncertain market it pays to be prepared.

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For more information please contact Trevor Young, Senior Partner on +44 (0)20 7558 3028.

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