Typically, underwriters receive less than 50% of the data they need to price a risk and exposure. The most likely outcome of this is a higher premium, but it could also mean underinsurance or a void policy. So, are you providing your broker with the right information?
Insurance renewals are a big part of an organisation’s annual calendar
It’s vital to get the right insurance, the right level of cover and, of course, at the right price, so you can balance your risk with your costs.
If the task of insurance falls to you, you need to understand what information you need to share with your broker in order to make sure that you are fully covered. If your submission to your broker is missing data, is late, or contains errors, it will likely lead to ineffective insurance policies and higher-than-expected premiums. Worst-case scenario, your policy could be void in the event of a claim, leaving your company exposed to risk.
Putting together insurance renewal questionnaires through risk management technology and an effective data-capture tool will enable you to collate all this insurance information with a lot less stress and hassle than through manual processes.
The insurance renewal process
Firstly, it’s important to know how your broker comes up with your quote. The data you provide on your company will go through several people before you receive a proposal. Your broker analyses the data you share, lets you know if anything is missing, tells your ‘story’ to insurers and negotiates the best price for you.
An actuary takes a very systematic approach—inputting your information into a risk model. If any data is missing, they will base any outcome on the worst-case scenario. An underwriter will take this model as a basis to price your policy.
In essence, you need to supply full and accurate company and claims information in order to get full cover at the most competitive price. All this information should be stored in insurance renewal software technology, like Ventiv IRM, so you have easy access to full and accurate data.
What information does your broker actually need?
Your insurer wants to know a number of things in order to calculate their risk exposure. There is a list of data requirements—such as employee activities, products, potential long-tail exposure, etc., for casualty cover.
They also want to understand your risk-mitigation strategy and claims record. In terms of property cover, underwriters want to know that you have implemented their recommendations to reduce your exposure to property damage and business interruption. They will also want to see a complete record of the frequency and severity of claims for at least the last five years.
All these data points are combined to reveal the overall risk, and therefore an underwriter’s desire to insure you and at what cost. Audit trails made possible with risk management technology enable risk and insurance managers to review and share what risk-mitigation strategies have been implemented, which gives brokers the chance to better ‘sell’ your business to insurers.
Case study: Saving US$195,000 on property insurance
To truly understand how missing data can affect your premium, this example shows the significant difference that updating a submission made for a U.S. property located in South Carolina that was a high risk for windstorms.
Initial renewal data provided
- Location
- Occupation
- Values
- Limit
- Deductible
Initial premium: US$450,000
Additional renewal data provided
- Construction
- Frame
- Cladding construction
- Year built
- Number of stories
- Roof covering
- Roof age
- Equipment of roof and anchoring
- Roof geometry
- Door design
- Window design
- Contingency plan
Revised premium: US$ 255,000
That is an incredible saving of US$195,000.
What can we take away from this?
It’s clear that your broker needs a lot of information from you so that they can negotiate with insurers to get you the right insurance cover at a competitive price. That information also needs to be accurate. If you do not have all your renewal data organised and in one place, a risk management information system software could be the right thing for you. Talk to us about how Ventiv IRM could help you.
David Thomas is Commercial Director, Ventiv Technology. Email david.thomas@ventivtech.com or LinkedIn
