Five Steps to Prepare For Hard Market Conditions For Agribusiness
Insurance is a unique product. Most people only think of it when they need to file a claim, at renewal time or when they find their current carrier is no longer able to meet their needs.
While price is important, it is no longer the main driving force behind insurance coverages. At the end of the day, clients expect their carrier to manage their claims quickly and efficiently. Most customers stay with their insurer until they have a bad experience with a claim.
But the insurance marketplace is constantly evolving and policyholders need to be prepared for changes to that market. It’s no longer enough to expect that you will be able to automatically renew with your carrier at the same rates you’ve been accustomed to.
For the better part of the last two years, the insurance marketplace has experienced a hardening of the market. As underwriters tighten up their guidelines, some policyholders have received non-renewal letters. Others are finding it difficult to secure the coverages that they want at the rates they can afford.
The agribusiness industry is not alone in dealing with hard market conditions, so fortunately, the steps that food and agriculture companies can take to adjust to these conditions are the same as with other industries.
- Start early. Don’t wait until you receive a non-renewal letter before you begin preparing. You should have an understanding of your current situation and be able to manage the things that you can control. This way, when the unexpected happens, you’re better able to respond quickly. You also want to be able to get your information out to insurance brokers as soon as possible, giving them more time to find a suitable solution to your needs.
- Sell your story. Being able to have a dialogue with underwriters enables you to put your business at the top of the stack. Be prepared to outline your business, to help them understand your risks, and demonstrate how you’re managing those risks.
- Know what you’ve done. Have a thorough understanding of the capital expenditures and investments you have made in your business. Safety improvements such as sprinklers or improved lighting exemplify that you take your risk seriously. Conversely, ignoring engineering, safety, and loss control items will cause underwriters to simply walk away from your business.
- Explain your loss history. The nature of running a business is that you will at some point need to file a claim. You should be prepared to outline the circumstances surrounding your claims and be able to show what mitigation efforts you took prior to the claim. A shock loss doesn’t have to be devastating if you can show the steps you took to attempt to prevent its occurrence in the first place and in the future.
- Have a targeted strategy. Understanding that much of the insurance market is about relationships, be prepared to have your broker send out many inquiries but only receive a few responses in return. In addition, consider reaching out to a provider for primary coverage, and asking them if they’d take on umbrella coverage as well. It’s easier for an insurer to add coverage to a business they already have a relationship with than to create a new relationship with an unknown entity.
While the insurance marketplace is showing some signs of loosening up, it’s still important that you prepare for a rigorous review of your risk liability. Having this information organized and available regardless of the market conditions will make the process for renewing or finding coverage far easier.
For more information on preparing for renewals or new coverages under hard market conditions, check out our on-demand webinar Food and Agriculture: State of the Market (Passcode: market1!).
Contact us today to help you prepare for these hard market conditions. Our team excels at knowing information across coverages so they can better leverage your situation and minimize your level of risk.
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