Risk ManagementInsurance Premiums Rising: 5 Steps to Managing Your Next Renewal

Concerned about increased insurance premiums heading into 2021? Combined critical events including the 2019/20 Bushfire Crisis, COVID-19, and massive losses witnessed across the global insurance market all contributed to increased prices, reduced coverage, the exclusion of specific risks, and lowered policy limits.

With ongoing COVID-19 challenges and severe weather warnings expected to further business disruptions well into 2021, the certainty of premiums rising at your next insurance renewal are almost guaranteed.

Fortunately, there are things you can do now that will assist your organization to manage insurance premium increases at renewal time. Here’s our top five strategies to consider:

1. Reassess Your Risk Profile

Although it can seem complex in its execution, the underlying fundamentals of insurance are not rocket science. Every unique organization faces certain environmental and industry risks that insurers understand based on volumes of historical loss data—and it’s these same trends that indicate how prepared the insurer is to underwrite.

Managing Corporate Critical Events

Do you understand how your unique organizational risks have changed throughout 2020? COVID-19 has affected every organization globally in some way. It could be a change in revenue, profit, supply chain, staff requirements, staff locations, critical functions, and customer bases.

If any of the above seem to have shifted across 2020 for your team, it’s time you reassess your risk profile to ensure that the risk scenarios and limits that you were insuring for are still suitable.

Without an updated risk profile you may over or underinsure specific aspects of your program. With the expectation of increased premium prices in 2021, narrowing down to a specific and realistic risk profile can increase your chances of accurately reflecting your organizational needs—minimizing the hit taken by your balance sheet.

2. Leverage Technology to Differentiate Natural Catastrophe Exposures

If you have assets or operations exposed to natural catastrophes either directly or through your supply chain, consider a dynamic risk and response plan using active threat monitoring to improve your overall risk profile.

Managing Insurance Risk During Critical EventsWith natural disasters now considered the Top 5 Risks threatening the global environment, the potential devastating effects of climate change are now considered and assessed in every underwriting cycle.

To differentiate your exposure to severe weather and natural catastrophes, your organization can now establish active threat monitoring and automated response actions through platforms such as iluminr.

Systems like iluminr allow organizations to plot and monitor their key locations and automate the first response for natural catastrophe risks before the event unfolds. This demonstrates to insurers that your organization is proactive in managing natural catastrophe risk by managing both asset and business interruption exposures through pre-emptive rapid response.

3. Prepare for Supply Chain Failure

Managing supply chain risk is akin to hitting a continually moving target. As your organization continues to evolve so do your suppliers and their suppliers further still. Understanding who your critical suppliers are each year is critical to begin designating contingency strategies in the face of an escalating event.

Setting up a system to monitor for potential events that might impact your supply chain is the next step. To get started, plot key asset locations in your supply chain on a threat map and set up alerts to notify you in the face of a potential event.

Be it flood, fire, or cyclone, alert recipes can be set, forget, and triggered without user interference and delivered right to where they’re needed most.

The last step to preparing for supply chain failure is setting resilience expectations with your critical suppliers. In addition to ensuring each point along your supply chain system has evidence of continuity planning, testing, and training, a proactive monitoring and automated response program can articulate to insurers that you have planned ahead for interruptions.

4. Shift Your Mindset: Assume Your Systems Will Be Compromised in the Next 30 Days

With more cybersecurity attacks witnessed in the first half of 2020 than all of 2019 combined, it’s safe to say that exposure to online threats is real. One key way to plan ahead for online attacks—unpopular though it may seem—is to assume it’s going to happen to you and going to happen fast.

By shifting to a mindset of ‘this will happen in the next 30-days’ you prioritize the need to review and uplift ICT infrastructure and can better guard against cybersecurity attacks.

Instead of taking a ‘wait-and-see’ approach that could compromise online servers, storage drives, email communications, and more, understanding which applications are critical to your ICT functions is step one.

If no existing backup of your critical functions are stored off-network or offline off-network, navigating a critical event during a potential cyberattack or system outage could cripple your team.

Relying on a remote critical event management platform—including CQ—can offer teams a secure, collaborative, and off-network space to access data during critical events.

5. Bring Real Evidence of Impact and Positive Change to Your Renewal Cycle

Differentiating your risk at insurance renewal time can come down to your ability to provide evidence of strategies to monitor and proactively manage risks. Turning up without evidence that you’ve learnt from the past and are actively implementing positive change is a sure-fire way to lose an insurers appetite for your risk.

Digging into and exporting key information from your critical event management platform, such as CQ, can provide a wealth of information about:

1. What critical events were recorded for your organization in 2020?

2. What were the recorded impacts and subsequent strategies used to manage those impacts?

3. How quickly did your Emergency and/or Crisis Response team activate?

4. What are the key lessons learnt from your post incident reviews?

5. What are you doing differently in 2021 to actively monitor threats and impacts?

There is no hiding from losses that have occurred or exposures that inherently exist. But by bringing transparency to how your organization is continuously improving its management of exposures, including adoption of technology and response innovation, your organization can differentiate from the crowd. Managing Corporate Critical Events

2020 was tough. Heading into 2021, it’s expected that many of the current and emerging critical events, will continue well into the future. With the insurance market showing no signs of softening, levelling up your internal response systems and capabilities to demonstrate proactive risk management has moved beyond “nice to have”.

If you would like more information on how your organization can actively monitor threats and better manage disruption risk through platforms such as iluminr and CQ, you can contact us here.

Written by Marcus Vaughan – Chief Growth Officer, Catalyst Technologies

Marcus Vaughan

References

  • World Economic Forum, 2020
  • Aon, 2020
  • ACS, 2020