Imagine this scenario. Your company has been with the same property casualty carrier for several years, but the carrier has decided not to renew as their risk appetite changes amid the continued volatility of the market. You need to find insurance or connect with a new admitted carrier, but you can’t break through the noise to get an underwriter to notice your cause.
What can you do to give your property submission the best chance for success?
Last fall, I wrote a blog titled “Cutting the Line: Tips for Moving Your Property Submission to the Top of the Stack.” The article discussed the prolonged hard market cycle and offered insights on how to differentiate by catching underwriters’ attention when they’re already inundated with submissions. Flash forward six months and, surprise surprise, we’re still fighting the same market challenges.
Previously, we briefly touched on one element that can enhance a property submission and help you stand out to underwriters weighing the pros and cons of taking on new business and risk: engaging a third-party engineering firm.
Robust Reports Provide Key Underwriting Information
Over the past few years, we have witnessed more accounts migrate from relatively stable single-carrier admitted property placements to much more complex, volatile and expensive shared and layered programs as insurers continue to adjust their risk appetite with the goal of improved profitability.
These programs require capacity from non-admitted insurers in the U.S., London, and Bermuda who by and large do not employ their own fire protection engineers in the same way many of their admitted counterparts do. They rely on engineering data from other insurance carriers or third-party sources, and most carriers these days consider their own reports proprietary, therefore only providing the resulting recommendations. Absent of full reports, the result from the non-admitted market tends to be either an all-out declination or prohibitive pricing and terms that reflect an assumption of poor risk quality.
The best way to obtain the level of underwriting information necessary to engage the full breadth of the global property insurance market is to come to the table with comprehensive third-party engineering reports for locations that are significant to a company’s operations.
These reports typically include:
- General Property Risk Summary
- Location-specific description of operations
- Detailed “COPE” information including construction details, occupancy and operations, protections in place (i.e. sprinkler adequacy), and analysis of exposures and controls
- Property Risk Assessment including Loss Expectancies (Normal Loss Expectancy, Probable Maximum Loss, Estimated Maximum Loss estimates)
- Valuation analysis
- Photos and diagrams of the facility
- Recommendations for improvement
This comprehensive analysis of an insured’s facilities does more than arm underwriters with the information they need to quote pricing, terms, and conditions that reflect the actual quality of a risk – they can act as a playbook for an insured to improve their facilities over time and address recommendations in a proactive and educated manner, helping prioritize capital expenditures with respect to risk improvement.
This information also enables us to work with our clients to develop a response to recommendations as part of our submission to carriers, so we are presenting not only the underwriting information and recommendations made but taking it a step further and proactively sharing actions taken or planned to address concerns revealed in the report.
Are Third-Party Engineering Services Right for You?
Third-party engineering services aren’t solely for accounts migrating to shared and layered programs. Assuming a reputable engineering firm was engaged, most property carriers accept third-party reports in lieu of using their own engineers. When marketing a property renewal, this can eliminate situations where five different insurance carriers all want to send their own engineers to the same site, saving significant time and resources on the part of an insured’s facilities and safety personnel.
Utilization of these firms is at an all-time high as more insureds are realizing the importance of taking ownership over their underwriting information. Early engagement is key to prepare for a successful partnership and provide ample time for the following steps:
- Determine which facilities should be in scope
- Schedule on-site visits – scheduling can be 60-90 days out depending on the firm and the time of year)
- Allow the engineers to create the report, including any necessary follow-up Q&A
- Craft a thoughtful and accurate response to recommendations including actual or planned corrective action
- Include reports and responses to recommendations as part of the submission to markets
Engaging a third-party engineering firm does come with a cost. Fees depend on size and scope of a facility, along with necessary travel expenses. These services may not be for every insured but in this environment where a quality submission can be the difference between having few options and having many, the return on investment can be enormous.
Collaborate With a Partner Who Understands Your Business
Not sure if working with a third-party engineering firm is the right decision for your business? The complex property experts at Holmes Murphy can help. Reach out today to get started!
