A McGriff Client Case Study
McGriff’s In-depth Risk Management Analysis Saves Large Hotel Owner 30%
Background
The client is a large hotel owner/operator with a portfolio of 75 hotels and 10,000 keys. When McGriff first met with them in late 2022, they expressed their frustration with pricing. They understood it was a challenging insurance market and were generally happy with their broker at the time but wanted a second opinion.
Their two major pain points were:
McGriff Discovery Process
As those in the hospitality industry know, we’ve seen significant rate increases in workers’ compensation in the past several years, much of it a response to the pandemic. The hotel owner’s coverage had not been marketed since the pandemic ended.
When the renewal came in with a flat rate, the previous broker and insured viewed that as a positive at that time and agreed to not market again. However, when McGriff dug in back in 2022, we noticed there had been a significant increase in payroll expenses. While the rate appeared to be flat, the total premium was actually a large increase.
At the same time, property was experiencing the hardest market in several decades, nowhere worse than Florida. Many carriers were only providing lower limits or pulling out of the market altogether. The insured had a Florida property that required a $25 million wind limit and was currently with a single carrier. When the carrier followed the lead of many others and issued a nonrenewal, the insured was stuck with massive premium increases and a slim number of single-carrier options.
Solution and Implementation
McGriff identified two major flaws in the previous broker’s strategy. We immediately went to market with the workers’ compensation coverage. The insured had been with the same carrier for years while growing substantially. We highlighted the insured’s growth story, low loss history, and loyalty with their carrier. When out to market, a new carrier found these traits attractive and offered lower rates. This resulted in a savings of more than $2 million on this single line of coverage.
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With the Florida property insurance issue, McGriff knew that bringing several carriers to the table and creating a shared and layer program would allow for more interested carriers, increased competition, and lower premiums. We also knew this would allow for a more customized solution.
The new shared and layered program increased the limit and also reduced the water damage deductible from $750,000 to $500,000. During our analysis, we also noticed the property had a significant amount of quake coverage. After reviewing modeling with the insured, we lowered the earthquake coverage based on the low risk of a major earthquake in South Florida.
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This is a representation of an actual client. Identifying details have been changed to preserve anonymity. Actual results may vary.
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