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Your next insurance review Successfully navigate through the process

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Contents

Reasons to review your insurance 4

What to consider before you start 6

Choosing your provider 8

What to include in your brief 10

The insurance review timeline 12

Understanding your quotations 14

Making your decision 16

Mastering fees and commission 18

How we can help 20

Reviewing your insurance can be a daunting task. This guide explains the process simply so you can manage it with ease and get the most

from your insurance programme.

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Are you 100% happy with your current insurance programme? There are a number of reasons why it might be time to consider a review.

Reasons to review your insurance

Reasons to review your insurance

PriceRate increases or concerns that

you aren’t getting the most competitive terms available.

AdvicePoor advice, uninsured exposures that impact you, not being made aware of new emerging risks that

might affect you.

ServiceDeterioration in service levels, changes in personnel or lack

of proactivity.

ClaimsPoor claims service or a lack of

support in claims reduction.

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What to consider before you start

What to consider before you start

Before you begin the tender process you should consider the following:

How often should you review?

It really depends on you. Many businesses have built long-term relationships with their broker. There is a lot to be said for this, but as with any service provider it is entirely reasonable and good corporate practice that a second view is obtained. A ‘fresh pair of eyes’ can often highlight areas that may be uninsured or inadequate as well as identifying areas in which premium savings could be made.

Should you review every year?

Reviewing too often and involving too many brokers can have a negative effect.

Insurers run a central national log of all quotes they receive, so any underwriter can see if they have received your enquiry in the past, which broker(s)

presented your business and what the outcome was. If underwriters feel that a business is routinely going out to market, but appears to have no intention of moving, it is possible that the underwriter will simply decline to quote and ‘file’ their papers without doing a proper review.

How much time will it take?

If you ensure your review is well organised and efficient your chances of securing the desired results will increase, but you do need to be prepared to invest some time.

Will it cost you anything?

Unless you decide to carry out a purely consultative mid-term review, where you agree a fee in advance, brokers will usually prepare terms for free.

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Choosing your provider

Choosing your provider

There is far more to choosing insurance than just searching for the lowest price so a good insurance provider should not be underestimated.

A broker can source products from a number of insurance companies depending on your needs and requirements.

However, where a broker is operating a scheme or facility, it's worth considering if they are approaching any other insurers for quotations on your behalf. It should be made clear to you within the documentation provided with the quotation as to the capacity in which they are acting on your behalf.

How many brokers should participate in the review?

Asking multiple brokers to quote won’t mean better terms, they will usually be approaching the same insurers. This can result in both brokers and insurers not investing the time and energy into the exercise as they have little or no chance of securing the business.

Your broker should have:

Proven expertise in your sector

Market relationships and leverage with relevant insurers

Access to all necessary product lines

An experienced and comprehensive service team

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What to include in your brief

What to include in your brief

Be as clear as possible in your brief. All brokers will wish to understand what is driving the review so they can try to match your requirements.

Agree the ‘terms of reference’ prior to review commencement, so that expectations are agreed and documented from the outset.

Some questions to think about within your brief:

• How will the broker support you during a major loss?

• Which lawyers will be appointed to handle larger claims?

• Will you receive a dedicated account handler?

• Do they have the authority to settle claims in-house?

You should ask for a quotation schedule (cover details/proposed costs based on figures provided) including:

• Premium summary

• Suggested improvements in cover/terms

• Uninsured risks

• Suggested additional covers

• Risk management advice

• Full policy wording/key facts

• Summaries including warranties and conditions

• Demands and needs statement

• Terms of Business Agreement (ToBA)

• Added value services

• Payment terms

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The insurance review timeline

Start your review4-6 months before renewal

Renewal preparations3 months before renewal

Renewal Proposal1 month before renewal

• Meet and select brokers so that you can decide how to review, understand the pros and cons of the different types of review and who to involve before the review starts.

• Contact your existing provider to obtain their views on what you can expect in terms of renewal. A common complaint from clients is that their existing broker springs a ‘nasty surprise’ regarding premium increases or availability of cover too close to renewal. Your existing broker should give you good notice of such issues but by making early contact you can ensure you are informed with facts that may influence your decision.

• Provide brokers with a review pack including a copy of your existing insurance summary listing the scope of cover (perils insured, main exclusions, extensions of cover etc.) and the current values. They will also require five years claims experience as this will directly affect the terms you are given.

• You will also need to provide some information about your business, including contact details, business description and details of any interested parties such as a bank or other lender. It is essential that all parties with a financial interest in the risk or part of it are noted under the policyholder section.

• Brokers must be provided with the same information to ensure you can compare their proposals on a like-for-like basis.

• Depending on the size and complexity of your organisation or risk profile, we would recommend that you commence your renewal preparations no later than three months in advance of your renewal date.

• Ask your competing broker to complete a detailed 'fact find' and a due diligence exercise on the existing programme. They should identify possible improvements or where you may have gaps or duplications in cover. In addition, the brokers may provide you with risk management recommendations to help minimise the likelihood of future claims. Underwriters react positively to detailed information and this may secure better terms.

• Take this opportunity to ask the brokers about their service levels and for references.

• Invite brokers to present their written reports and proposals. The timeline for the review should allow sufficient time before renewal for you to examine the proposals and make a considered decision.

• Take time to review the reports submitted. You can also ask the brokers to draw to your attention specific differences to assist you. The report should include a critique of your existing arrangements with recommendations of improvements in cover and the options available.

• Meet and understand who will be looking after you as your day-to-day service team.

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Understanding your quotations

Understanding your quotations

Brokers are required under Financial Conduct Authority (FCA)

regulations to ensure that quotations provided are ‘contract

certain’. In practice this means that, in addition to providing

quotation summaries, the broker should provide a full copy of

the policy wording.

What are the most important documents that I should read?

If you can, you should read the entire report and supporting information provided, focusing in particular on the following:

• Review the quotation schedules to ensure the key cover details are in line with your requirements

• Review any cover critique in the report – this will highlight any deficiencies in your existing protection and also make suggestions for improvements

• Review pricing details and payment terms

• The broker should have already discussed any important warranties and conditions that apply

• Consider any uninsured risks highlighted that have been identified as relevant to you

• Review details of the service provision offered and any service level agreement.

How can I be confident that the new cover I am being offered is as good as or better than that which I currently receive?

Generally, a review brief will look to provide alternative quotations on a ‘like for like’ basis. The broker should then discuss any changes/additions to the existing programme that they think would be best suited for your business. They should also let you know if any of the cover you currently have is not included in their proposed policies and draw these to your attention.

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Making your decision Your decision is likely to be based around the criteria which prompted the review. The relative importance of each criteria is something for you to decide.

Price

Pricing is a key factor for many businesses. However, before making it your principal deciding factor, be aware that a ‘cheap’ premium may mean inadequate cover if you ever need to claim. Understand your broker's fee structure and ensure there are no hidden costs.

Cover

Take the time to compare the cover offered and do not be afraid to ask questions if you are uncertain. Not all policy wordings are the same.

Service

It is not always easy for a new broker to demonstrate their service capabilities. However, any risk of change can be reduced by asking the right questions; will I have a dedicated account handler? What service standards can I expect day-to-day?

Claims handling

You need to be confident that the broker will handle your claims efficiently and effectively. Has the broker provided sufficient information and reassurance about their claims handling expertise and capability? Do they have dedicated personnel with experience of your type of business?

Risk management support

What advice can the broker provide for reducing losses and controlling premium levels through managing risk within your business?

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Mastering fees and commission

Mastering fees and commission

You are entitled to discuss remuneration with your broker and to consider whether a commission or fee based service provision is most appropriate.

Traditionally, brokers are remunerated by commission which forms part of the premium. The insurers apply a commission rate to each class of business (e.g. Property, Motor, Employers Liability) and the percentage paid is agreed between insurers and the broker. The broker then charges a gross premium plus Insurance Premium Tax (IPT).

An annual fee is generally a more appropriate method of remuneration for commercial accounts and is a transparent way of conducting

business. The commission element of the premium is ‘stripped out’ and the premium is charged net of all commissions. IPT is charged on the net premiums, rather than the gross premiums. The annual fee is agreed between you and the broker at the outset and at the same time the broker should advise what services are included (and excluded) in the agreed fee. The fee is not linked to the premium to ensure there is no conflict when negotiating premiums and the fee is not subject to IPT.

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We can provide your business with a confidential, free of charge service that will help you establish if you are paying the right premium for the optimal coverage. We can do this whilst giving you guidance on the steps you can take to reducing insurance expenditure.

What do we review and provide guidance on?

1. Premium

2. Policy coverage

3. Excess levels and structure

4. Indemnity limit

5. Alternative insurers

6. Renewal strategy

What do we need from you?

1. Most recently completed proposal form

2. Claims history

3. Current policy documents

How long does it take?

For the majority of firms, we can complete the review in no more than 5 -10 working days.

How we can help

Confidential Free of charge No obligation

Contact us now for a free, confidential no obligations insurance review on 0117 205 1800 or email info@howdengroup.com.

How we can help

DisclaimerHowden does not warrant the accuracy, completeness, timeliness or usefulness of the data, information or opinions contained therein or provided hereunder. The information is provided “as is” without warranty of any kind, express or implied including, but not limited to, implied warranties of merchantability or fitness for a particular purpose. By using the information you recognise and agree to hold Howden harmless for any liabilities as a result of your using the information.

For a quotation please call

0117 205 1800info@howdengroup.com

Howden UK Group LimitedOne Creechurch Place, EC3A 5AF London United Kingdom

T +44 (0)20 7623 3806F +44 (0)20 7623 3807E info@howdengroup.com

www.howdengroup.co.uk

Part of the Hyperion Insurance Group

Howden is a trading name of Howden UK Group Limited, part of the Hyperion Insurance Group. Howden UK Group Limited is authorised and regulated by the Financial Conduct Authority in respect of general insurance business. Registered in England and Wales under company registration number 725875. Registered Office: One Creechurch Place, London EC3A 5AF. Calls may be monitored and recorded for quality assurance purposes. 2/19 Ref: 3092