The Renewal Account in Jeopardy

At the end of every quarter, it is inevitable that competition will begin to heat up as insurance companies do their best to try and write as much business as possible.?When competition intensifies, the resulting downward pressure on renewal premiums can be stressful for any insurance agent.

It is?fairly common?for me to get a call on a?middle market or large?account with higher limits that my agent controls advising that another market has undercut the account.?Larger accounts with higher limits are prime candidates for competition because of the high cost of capital associated with concentrating a five-million or ten-million dollar?layer with one insurance company.

When I get calls looking to save a renewal in jeopardy,?one?good strategy is splitting up the limit liability?with excess liability insurance.?Doing this has two primary advantages to the insured.?The first advantage is that it is often cheaper for the primary?insurance company?to offer a two?million or three million dollar?limit instead of offering up the full five million dollar limit since the incumbent market is no longer being asked to take as high of a risk on one account.

The second advantage is that a new excess carrier can often?offer a secondary limit above the primary?limit?at a discounted rate because the excess?insurance company?is further removed from the risk.?With the?excess?underwriter viewing the primary layer as a large deductible?from a claims perspective?it often provides the?excess?underwriter?room to be much more aggressive on pricing.

Pursuing excess insurance is always an option when faced with a renewal in which there is competition?but is not always a magic bullet.?Making sure the excess is true follow form coverage and having?multiple insurance companies?involved in the event of a claim are some of the downsides that the insured?has to?be aware of?on?their side if an option like this is made available.?Being flexible and thinking outside the box?is?the best way to do the right thing by the insured.

Andrew J. Kelly

RPLU+,?ARM,?ASLI,?MLIS,?AINS,?CPLP,?AIS

Senior?Vice President

Direct Line:?(773) 305-7681

Cell?Phone:?(773) 559-1883

Fax:?(773) 328-0508

Alternate Fax:?(773) 328-1259

E-Mail:?[email protected]