Getting the best deal in a limited “bandwidth” insurance market

Chairing the event, Paul Smith, corporate senior vice president, carrier relations, HW Kaufman Group, likened the ability of wholesalers and carriers to field submissions to internet bandwidth – “we only have so much bandwidth, our carrier partners only have so much bandwidth”, he said.

“That creates a responsibility on behalf of us to work with our retail agents to make sure that we have quality submissions and that they’re thorough submissions,” Smith said.

Burns & Wilcox commercial insurance leaders, who appeared on the webinar, were asked to share their suggestions for agents looking to get the best deals for their clients in a market looking to quality over quantity.

Getting in front of clients early

“The biggest thing for 2023 is you’ve got to be proactive in getting in front of your clients, 90 days and more,” said Barry Whitton, managing director, broker, property, Burns & Wilcox Brokerage.

“A lot of times the renewals and the discussions are held 30 days from the effective date; that’s not [going to fly] in the marketplace today.”

It will be important for agents to educate their clients and let them know “what the market is about”, with underwriters having to make some “difficult decisions”, Whitton said.

“They’ve got to decide, you know, what limit they need… versus what they can afford, they’ve got to look at potential retention changes and deductible increases,” Whitton said.

“All those things take time to digest and come up with decisions.”

Prepare for valuation reviews in property

On the property side, Whitton warned that an in-depth review of valuations will be on “everybody’s plate” and on every underwriter’s mind.

Defining those valuations could require a third-party appraisal, Whitton said, and this will have to be more than a “gut feel” or simply calculating by indexing against values when a building was built.

Rate increases multiplied by higher values are likely to create “significant, exponential” premium increases for renewals, Whitton said.

Strategize and manage client expectations

For Adrian Smith, managing director, broker, casualty, Burns & Wilcox Brokerage, getting ahead with a strategy and managing client expectations “is probably the most important thing”.

“You can normally recognise an account when it’s going to be a really difficult renewal, a lot of the accounts we’re still seeing, they’ve got multi-million-dollar losses, they’re distressed,” Smith said.

“The more standard type [of] stuff, you’re going to get rate increases, but they’re not as challenging, there is capacity out there.”

If, though, an account has a “whole bunch of losses out there”, things could become more difficult, according to Smith.

“You might only have three to five underwriters that want to consider the account,” Smith said, and underwriters will be looking on an “account-by-account” basis.

Mid-market captives, or rent-a-captives, have been a big trend in recent years, and for clients with large workers’ comp exposure or heavy fleet, these could “make sense” and potentially offer a “very cost-effective premium, way cheaper than the E&S marketplace”.

Agents should not disregard the standard markets, Smith said at the Burns & Wilcox event.

“We had an account recently where we had a very challenging situation, and the standard market came back in for no additional premium on a couple of hundred-million-dollar contract and gave a 244, which saved us a tremendous amount on the umbrella,” he said.

“I don’t know how our retail client did it, but their partners – you have to develop a strategy – so they made an accommodation at a high level, but it helped us tremendously on a challenging placement.”

Auto buffer markets could also help, typically working out best over a “couple of hundred units”, Smith said.

Stay on top of loss run information

Agents should also be preparing clients to expect to be fielding more historical information on loss runs, with carriers seeking data on more years than previously.

“Five years of loss runs is probably not enough these days,” Smith said.

“Carriers are asking for seven years but if you can get 10 years, that’s even better.”

At the event, Bill Gatewood, corporate senior vice president, national personal insurance practice leader, Burns & Wilcox, cautioned retail agents not to take a “shotgun approach” to submissions, warning that a “transactional mentality” will only get firms so far in today’s market. 

How are you strategizing in today’s market? Have you seen any recent wins out of a tough situation? Leave a comment below.