Change is coming. Following one of the most disruptive and costly natural catastrophe seasons in history last year, insurance buyers will likely experience rate increases for 2018. Risk managers and brokers can prepare by knowing the rate ceiling for a company, developing an up-to-date risk profile to present to carriers at renewal and evaluating alternative risk transfer options.
Captives have always been at the core of an innovative risk management strategy, says Pete Rasmussen, Vice President Business Development for USA Risk Group. But for companies who currently don't have a captive insurance company, changes in the soft commercial insurance market could adversely affect their bottom line with higher rates and possible disruption to coverage.
Risk managers and brokers have been paying close attention to speculation that insurance costs are going to rise. Since P&C insurance losses from 2017 were over $29 billion, and CAT losses drove a large portion of that, property rates are expected to rise in early 2019. This will no doubt become a main driver for companies to review and reevaluate their coverage. Pete urges insurance brokers to take this opportunity to get ahead of the market shift with proactive planning because as he says, nobody likes competition sniffing around when it comes to presenting cost-saving options to clients.
"With rising property rates it’s a great time to look at deductible buy downs or higher SIR’s to offset the increasing rates," Pete explained. "And our team can walk you through how a captive can be used to finance it."
CALMING THE SWING
Insurance brokers looking to present options to clients who may be faced with either higher rates or a loss of coverage in the traditional market should look into captives. Establishing one not only allows an organization to take control of their risk management but it can also manage exposures better while building potential cash reserves - thus stopping their rates from experiencing the soft market to hard market swing.
Learning about captives is a multi-step process, which is why we believe the first step is to schedule a free consultation call with our team. By reviewing the company’s goals, risk management strategy and claim history, we can quickly assess whether it makes sense to move forward. Plus, we work with brokers on nearly every account and can provide helpful info for them to share with their clients. Check out our resources for business leaders and brokers or schedule a consult call by clicking below.