Is the hard market affecting the High Net Worth Insurance Client?

The Insurance landscape is currently in a hard market cycle across a number of insurance classes.  Insurers are tightening up their criteria for coverage and it’s possible that the levels of coverage previously secured will not be received, with premium increases and lengthy renewal processes all being likely.

Peter O’Donnell, Associate Director at MAC Group, has a few words on the current state of the market and guidance on how businesses can best prepare.

“It’s hard to believe that it’s a year ago that we first spoke about some significant changes we witnessed in the financial institutions insurance market.  Large claims combined with less insurers reduces the liquidity of the market and price increases until more competing insurers emerge. 

The hard market cycle meant that businesses needed to be prepared for the renewal process to be more challenging than usual, or if any new policies would necessarily have the same breadth or coverage without a significant rise in the premium.

In September last year, Gallagher insurance identified that the trend was hitting the High Net Worth market and brokers were having to find new ways to support their clients. Andy Cunis, managing director explains that “Attritional losses from escape of water and fire claims have made some of the capacity books unprofitable, forcing some of the providers to withdraw.  It’s not been such an issue over the last couple of years as the market was so soft but it’s starting to be felt.”

Naturally COVID-19 has also had an impact on the market.  More claims for travel plans cancellations and household policies have moved towards accidental claims over theft and escape of water whilst people are forced to stay at home.

So what does this mean for the High Net Worth Insurance Client?

With insurers refining their approaches and with several leaving the market entirely, new insurers have entered the market aggressively.  This can open up opportunities for what may look like a good value offering but this can prolong the hard market cycle if companies have found to have priced incorrectly, to further hike up premiums down the line. A careful look at the wording along with the company’s financial credibility will be the key to consistency.

As a broker with our capability, we continue to collaborate with our international insurers more utilising our market leverage to continue the provision of enhanced and bespoke insurance policies

Here are some of the actions you can take to ensure you receive the best available terms from the market:

• Work with a broker that understands what you do, is well resourced and can leverage the insurance market regardless of which part of the cycle it is in.
• Start your renewal process early with a clear strategy for what you want to achieve and contingent plans in place should the need arise.
• Devise a disclosure plan in conjunction with your broker that works best for your risk and allows differentiation from the market norm.
• Ensure your broker influences the wording of the Terms and Conditions to protect you and not the insurer”.
• Be cautious about accepting premium relief in consideration of coverage restrictions, it is unlikely to provide long term value.

Gallagher’s have produced the informative video at the end of this article, that whilst aimed at the commercial sector, explains a hard market cycle succinctly.

MAC Commercial (a part of MAC Group) is an all-inclusive insurance broking service for corporate and private clients.  Our knowledgeable team develop long-term and personal relationships with each client which means we can provide a truly bespoke service.  If you are looking for a competitive insurance quote, or if you need some help in identifying all potential areas of risk in specialist circumstances, we will be able to tailor a solution suitable for you.

Produced in association with MAC Group & Arthur J. Gallagher

01624 639450  mail@macgroup.im www.macgroup.im

MAC Commercial & Professional Risk Limited is Registered with the Isle of Man Financial Services Authority as an insurance intermediary in respect of General Business. Registration Number: 118815C