How to prepare for your insurance renewal in the current climate

Lisa Birch, who leads Howden’s specialist manufacturing team, explains the factors impacting the insurance renewals at this time and how you can help achieve a desirable result at your next renewal.  

The current pandemic has placed strain on lives and businesses, and its long-term impacts are unclear. Each client’s insurance arrangements will differ, but there is a range of insurance policies that may be triggered by the pandemic. Take some time to remind yourself of the insurance policies you have in place, how they might respond, and what (in a practical sense) needs to be done to ensure you understand expectations on you as a result of Covid-19 or in the event of a notifiable event and/or claim.

Below we set out some key points to consider for policy renewals and complying with current policy requirements. The Howden team is here to assist your understanding of your rights and obligations, and to put you in the best position should you need to make a claim.  Please do contact Howden to discuss any queries you have.

Key Points for Upcoming Renewals

• Renewals are generally taking longer – early engagement with your broker is crucial
• Consider and discuss with us any changes to your insurance demands and needs
• Duty of fair presentation continues to apply – this is more challenging during lockdown
• Insurers may look to add or amend specific Covid-19 exclusions or other exclusions
• Consider notification of circumstances which may or are likely to give rise to claims – crucial if Covid-19 claims are to be excluded going forward for certain insurance classes.

Engage with your broker early in the process

The Covid-19 pandemic commenced at a time when, for some industries, the insurance market had already started to harden. Conditions within the Professional Indemnity, Property, Liability, Directors’ and Officers’ and Crime markets in particular were already challenging, with many Insurers seeking to restrict cover, reduce capacity and significantly increase premium rates and/or excesses in response to poor loss ratios, reduced investment income and regulatory scrutiny of unprofitable lines of business. It is quite possible that where Insurers have been exposed to substantial liabilities resulting from the pandemic itself, we may also see a hardening of the market affecting other industries and insurance policy types.

Hard market conditions make it important to engage with your insurance broker well ahead of renewal. Renewals may take longer to negotiate; acceptable terms may be more challenging to obtain; and Insurers may require you to provide additional information (for example on Business Continuity Planning, Directors’ & Officers’ Renewal Proposals, Premium Finance Applications and Covid-19 related exposure). Prompt provision of information provides the best chance of a smooth renewal process, and will at least allow time for you to consider your options if significant premium increases and additional exclusions are on the table.

Demands and needs

Many businesses are being impacted by Covid-19 in a number of different ways and, as the measures taken by the Government continue to evolve, the way in which businesses are able to operate will also continue to evolve and the risks that they face may now be different and continue to change. It is therefore important that you consider carefully whether your insurance demands and needs have changed and that you continue to have the right type and level of insurance in place, whether this be an increase risk exposure in some areas and a reduction in risk exposure in others. 

Covid-19 Exclusions

Notification of Claims or Circumstances

It is particularly important to review any policy right or obligation you have to notify circumstances that may or are likely to give rise to a claim.  If Covid-19 related claims are to be excluded from your policy going forwards, your right to notify a circumstance to an expiring policy may provide your last chance to obtain cover for this sort of claim – e.g. especially “Claims Made” Policies which typically relate to Professional Indemnity and Directors’ & Officers’ Liability Policies.