The insurance market for the social housing sector is in turmoil. For over twenty years a “soft” insurance market and a drive for market share by competitors drove premiums down to exceptionally low levels. As the climate crisis produces more frequent catastrophic weather conditions, large flood and storm claims coupled with claims caused by other factors has produced poor underwriting results for many insurers.
Inflation has caused increased insurers costs for the normal attritional claims they expect to receive. The economic response to inflation is to increase interest rates. The result of this is that insurance companies can make more money from investing their capital than insurance underwriting, and they withdraw from sectors where results are poor, such as the social housing sector. The insurers who remain have less competition and can then charge higher rates. All of this has produced the eye watering increases many housing associations are experiencing.
The key to achieving the best outcome at your next insurance renewal hinges on three key areas.
Start as early as possible. Between four and six months ahead, or longer depending on the types of buildings in your portfolio or if your portfolio has significant claims. Consider all the options available to you. If you are going to tender, engage with as many brokers as possible. Discuss with all of them the insurers they use, who their main insurer is and how they will approach your renewal. Having discussed this with them, choose at least two brokers and divide the available insurers between them, making it clear to all which insurers they can approach. This will create an element of competition. One broker having total control of all insurers doesn’t always produce the best results for you the customer.
Collate all the information on your insurances as early as possible and look to be able to provide all of this data to your chosen brokers/insurers at least 90 days ahead of renewal. The property data should include key information to help underwriters to review the exposure. The information we would expect to see is:
- Full risk address including post code.
- Sum insured per property.
- Number of storeys.
- Year built.
- Type of occupancy.
- Construction details.
- Unique property reference.
The Claims Data we would want to see is as follows:
- Date of loss.
- Type of loss.
- Claim paid.
- Claim outstanding.
- Excess deducted.
- Full risk address or unique property reference.
Be prepared to consider all options available to you to get the best results:
- Consider increased excesses. Your insurer/broker should be able to assist you with modelling the financial impact the excess has versus the premium being saved.
- Renewal dates can have an impact on insurer appetite. If your renewal date coincides with one of the quarter dates, consider moving the renewal by seeking an extension from your current insurer. Quarter dates are traditionally exceptionally busy for insurers and social housing renewals. At these times insurers will be very selective as to which new risks they want to quote for, and you may not get the best response or even a quote. If you can move your renewal date, you may entice more insurers to quote which could create more competition in the market.
In summary, the way to achieve the best outcome at renewal is to create competition between insurers and brokers. With so many housing associations coming into the insurance market, insurers can be very selective – picking which risks they think will give them best opportunity of making a profit, and ignoring those they believe will not. Your focus at renewal must be making your risk look as good as it possibly can, understanding your portfolio and your claims record, and in conjunction with your advisers demonstrating to insurers why they should choose your portfolio. Emphasise the positives, and acknowledge and put in place plans to mitigate the negatives.
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