The U.S. commercial property & casualty (P&C) market continues to harden, driven by increasing loss trends in liability lines, historic low interest rates, more large weather-related loss events, and other compounding factors. With no changes related to these drivers on the horizon, the marketplace will continue to be characterized by a high level of uncertainty.
The P&C market has traditionally been cyclical. Hard markets have generally been represented by rising premiums and reduced capacity, while soft markets usually see a longer period of falling rates and expanding capacity. However, many experts believe the current market to be more underwriting driven, an anomaly that has not followed the path of traditional cycles.
Key Approaches to Minimize the Effects of a Hardening Market
McGriff is dedicated to helping our clients succeed in a changing marketplace. Key strategies include:
- Plan early. Identify key areas of concern in the program and develop a plan to address them with multiple options, at least 120 but up to 150 days in advance.
- Prepare senior management for potential impacts to budget/premiums, coverages, and longer quoting timelines. Even the earliest renewal submissions may come down to the wire for finalization.
- Communication is key with both the insured and insurers. So are realistic budgets with multiple options.
- Conduct a loss analysis and consider multiple retentions and structures, including captives, if warranted. Many carriers now require 10+ years of losses, summarized.
- Meet with carriers early to understand all issues and thoroughly examine potential options. Seek underwriter commitment to general renewal terms early in the process.
- Proactively provide renewal exposure updates, any supplementary applications, and all supporting documentation early in the renewal process, but by no later than 90 days pre-renewal.
- To remain top of mind amidst increasing underwriting submissions, ensure exposures are current and the submission is comprehensive and thorough.
- We are seeing the most drastic premium/rate changes from incumbent non-renewals in any layer/structure. If an underwriter or underwriting management expresses concern about loss ratio and references the potential for non-renewal due to losses, class of business, or particular risk characteristics, attempt to work through issues early via risk control, higher deductibles and rates.
McGriff continues to invest in our suite of digital, data, and analytics capabilities, using the data-driven market intelligence delivered by MAP®, our McGriff Analytics Platform, to assist you in securing favorable pricing and coverage terms.
Contact a member of your local McGriff team for current information and guidance on navigating the changing marketplace and be sure to:
- Initiate renewal conversations with your broker team early to minimize surprises.
- Document and communicate your risk control processes through your broker to the underwriting community.
- Engage your local or industry-specific McGriff team to prepare data and analytics that differentiate your company from peer organizations.
Insurance products and services offered through McGriff Insurance Services, Inc., a subsidiary of Truist Insurance Holdings, Inc., are not a deposit, not FDIC insured, not guaranteed by a bank, not insured by any federal government agency and may go down in value.
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