United Kingdom

Six of the best: how businesses should approach their renewals in a changing insurance market

As the UK continues to battle a pandemic which shows no sign yet of retreat, economic headwinds including labour shortages, supply chain issues, an end to government support schemes, and an expected upward trend in interest rates continue to present businesses with operational and strategic challenges.

In addition, businesses are facing a testing insurance market that, while showing some positive signs in terms of a slowdown of rate increases and the welcome arrival of new capacity, features significant variation both between and within classes of cover. And while it’s true to say that many insurers have completed remediation work on their portfolios and may be looking for growth, Aon’s Global Market Insights Report Q3 2021 reveals it’s far from a buyer’s market in any class, let alone in a tough segment such as cyber.

In this environment, it’s critical that buyers work closely with their brokers and risk partners to secure the most competitive insurance deals they can without compromising too far on areas like deductibles, limits and available coverage.

Here are six key areas of focus that should feature in every organisation’s renewal programme.

  1. Stand out for the right reasons: be proactive and differentiate your risk.
    Starting earlier in the renewal process is critical. The current, selective underwriting environment calls for a much greater and detailed disclosure of business profiles as well as a description of risk management and mitigation efforts, and needs more time. Be sure to describe changes to your business models. Leverage analytical tools like risk modelling. Risk differentiation is key and, when combined with sufficient lead time for underwriter review, generally results in more positive outcomes.
  2. Set your risk tolerance and appetite at a portfolio level rather than per product
    Rather than assuming large deductibles on part of your program and small deductibles on other parts, consider consolidating premium and leveraging it to build scale within a captive.
  3. Leave no insurance stone unturned: explore all options
    Review retentions, scope of coverages, and sub-limits. Consider alternative sources of capacity, long term agreements, renewal discounts, and structured portfolio solutions.
  4. Work with insurers who think and act like you
    As environmental, social and governance (ESG) factors become ever more important from investors, to customers and employees, aligning with insurers that share similar ESG-related values will help ensure more sustainable and mutually beneficial relationships.
  5. Relationships count – maintain ongoing insurer dialogue Even after the inception of a programme, maintaining connectivity with underwriters to reinforce ‘out of cycle’ relationships across insurer management levels is important. These relationships should be expanded to include claims teams to align on expectations throughout the claims journey. And talking of claims...
  6. Be proactive and thorough on claims
    Provide regular updates to excess insurers, especially related to any claim nearing 50% of the first attachment. Reporting delays and failure to report according to contract terms remain two of the top reasons claims are denied.

Even as some constraints of the hard marker relax a little, it’s still a tough market and no buyer can afford to assume there will be easily accessible and affordable capacity out there. That’s why it is critical to follow these fundamental rules to give your organisation the best chance of developing a comprehensive and cost-effective risk transfer programme in 2022 and beyond.

For more of the latest detail and insights on the global and UK insurance market, as well as tips on how your business can navigate the challenges ahead, download Aon’s Global Market Insights Report Q3 2021.


Gaby Field
Broking Director at Aon