Changing Carriers on a Renewal Account

Access to the environmental insurance marketplace. Simply put, this is one of the main reasons why agents from around the country work with environmental wholesale brokers to find environmental coverage for their clients.

Having options is a great way to demonstrate your expertise and commitment to your clients. Clearly, this is a good approach with new business opportunities, but marketing a renewal and encouraging your client to switch carriers on an existing account need to be carefully considered. In today’s market, many accounts are marketed to try to achieve a better price. While that is certainly a worthwhile goal, changing carriers on a renewal account may cause real problems.

Here are a few issues to consider:

  • The agent needs to be fully aware of the specific coverage differences between the expiring policy and the new policy. Although both forms may be appropriate for the insured’s needs, there may be discrepancies between them that could potentially create gaps in coverage.
  • There will always be differences in the carrier offering the coverage. Where one may have a solid A.M. Best rating and a history of handling claims effectively, another may have a lower rating and not have a successful claim track record. Service and stability add a great deal of value.
  • If the agent is aware that there are enhancements on the expiring policy that may not seem too significant; yet they are not offered on the newer form—and a claim is filed—the agency may be held liable and have an E&O issue.
  • Aggressively marketing a risk every year gives the insured a reputation in the marketplace. Many accounts do not get reviewed by companies because they see them every year and never write them. Unfortunately, there may be a time where the insured really needs to switch carriers and the carrier declines to quote.

Here are some steps that brokers will want to take if you are considering marketing an account at renewal:

1 – Review the account 90 days before expiration.

2 – Discuss the coverage options that may exist in the market to assess if there is a better product being offered.

3 – Assuming the insured is happy with the coverage and carrier on the risk, it is important to determine the target price or rate goals for the renewal.

4 – Confirm with the insured that if that premium or rate goal can be achieved with the incumbent carrier, they will renew.

5 – If the carrier cannot accommodate the requests, there is still time to go to other carriers and try to achieve the insured’s coverage and cost goals elsewhere.

This allows you to give the insured what they are looking for without running the risk of reducing their coverage or any of the other pitfalls of moving coverage to a different carrier. Even if alternative proposals from other carriers are requested, agents are still encouraged to send renewal information to the incumbent carrier. The insured should not move the program elsewhere without comparing any new proposals to the expiring policy.

For more information, please call us at 1-800-596-2156 or email us.