December 9, 2020 by Adam Malik
They say timing is everything, and that is particularly true of brokers working with underwriters.
The earlier underwriters can tell brokers about the market challenges they are facing, what they deem to be an important part of a submission, and whatever pertinent information they can provide about writing a particular risk, the better the industry can function and customers can be served, says Andrew Steen, the president of Berkley Canada.
In a hard market, timing tops the list of things that underwriters can do to help themselves, brokers, and clients, Steen said during a recent webinar hosted by the Insurance Institute of Canada.
“You’ve got to be early with your messaging,” Steen said. “Getting out in front of your renewal base and sharing your message with brokers and customers around where they’re going to be most impacted is critical, because it allows for the time to be spent to seek alternatives.”
Delays end up making things untenable all around, he added. “Saving bad news to the end of the process — to the week or days leading up to the renewal — just makes the impact much, much worse,” Steen said during Finding Your Success in Today’s Hard Commercial Market webinar, part of the institute’s At the Forefront series.
This is not the time for underwriters to act tough, Steen added. Instead, empathy goes much further.
“Your tough stance on a renewal could really put both the client and the broker in a really challenging position; a really difficult spot,” he explained.
Instead, underwriters should see how they can help. For example, can the underwriter suggest potential alternatives that would create options for moving the program forward?
“Rate’s not the only tool in the toolbox,” Steen said. “You might want to consider an increased retention, limit options, co-insurance — there is a bunch of different tools that can be brought into the equation here that perhaps offer a more attractive alternative.”
His final piece of advice to underwriters is to be clear and communicate why a submission did not make the cut. Tell brokers and clients the result and why.
“We need to be really clear about sharing the rationale,” Steen said. “Explain your ‘why’ to your broker and the customer. Why in particular is their risk positioned for an increase, and why is the magnitude what it is?”
Even in advance of the submission, underwriters and brokers might take a stab at what the result of a submission is going to look like. “I would encourage you to examine on a case-by-case [basis]: What does the individual customer’s rate history look like over the past five years?” Steen said. “And look at: What’s the cumulative change over that period of time? Pricing or reading per unit of exposure: Is it up or down? How much is it up or down? That’s valuable information.”
Feature image by iStock.com/busracavus
Markets need to be more transparent about their target class and where they are most often successful. For over a decade they have encouraged the shotgun by failing to provide this information in any significant way. Now they are suffering through a hard market as a generation of brokers have learned to follow this practice.