It’s been a difficult year for many businesses due to the global pandemic and economic uncertainty. Although the insurance industry remains resilient, these challenges have added some complexity to a dynamic liability marketplace.
But where there are challenges, opportunities exist as well. So, what does the general liability landscape look like now? And how can risk managers and business owners work with agents and brokers to ensure the best outcomes?
Liability Market Characterized by Rising Insurance Costs and Diminishing Capacity
In 2020, the general liability marketplace was hardening after several years because of:
- Insufficient rating
- Rising exposures
- Increasing claim costs
“Rates were going up and capacity in the excess and umbrella space was diminishing,” said Mike Low, Head of Complex Liability Solutions. “The impact of COVID-19 added some complexity to an already challenging liability environment.”
Altogether, these factors combine to extend market conditions and upward rate pressure. For businesses with hard-to-place general liability risk working with agents or brokers, it can be difficult to navigate this environment. Despite the challenging market conditions, there’s an opportunity to manage costs through a variety of best practices.
Best Practices to Turn Challenges Into Opportunities
Against this formidable backdrop, several best practices can help businesses with higher-hazard liabilities get the best outcome. These include:
Having a good relationship with agents or brokers. Transparent communication is important to make sure business’ needs get addressed.
“It’s crucial that brokers and agents understand the market dynamics their customers face and help manage their expectations accordingly so there are no surprises,” Low explained.
Starting early and using quality data and submission information to help tell the risk story. Low emphasized that just because your business is in a higher-hazard industry, it doesn’t mean you’re a bad liability risk.
A complete submission helps eliminate the guesswork for an underwriter and highlights your risk management and loss control practices. It’s also a good idea to leverage your insurer’s risk engineering and claims service to provide a tailored program for your unique business.
Examine your marketing activities to make sure they’re measured and appropriate. All of these activities should be vetted by legal counsel. Similarly, consider a comprehensive reputation management strategy to measure the public sentiment and customer experience regarding your services and company in general.
Low explains that “you may have a brand strategy and a marketing strategy, but a reputation management strategy is equally important, as it lends insight into public sentiment around your product or service.”
Be open to larger retentions, like moving from a deductible or guaranteed cost program to a self-insured retention (SIR). Moving to a SIR illustrates to an insurance carrier your business’ desire to control costs and invest in risk management. The premium savings can also be material.
A Strong Partnership Makes All the Difference
While 2020 was unsettling and trying, it also showed where opportunities exist for businesses to better manage risks.
Working with a trusted partner like The Hartford can enrich your existing business and spark new business growth. The Hartford’s Complex Liability Solutions team is experienced in working with businesses with high-hazard liability exposures and hard-to-place products and premises operations risks. The team is made up of:
- Risk engineering consultants
- Liability claims specialists
For more information, please visit our Large Business Insurance page.