With $44.1bn paid out in claims (gross incurred) in Australia last financial year, it’s inevitable you will have a ‘tricky’ renewal in your portfolio but at Solution, we want to take the pain out of renewals with claims. In this article, our financial lines underwriters discuss renewals with claims, what they are looking for and how brokers can ensure a smoother experience for themselves and the client.  

Be proactive

If you’ve ever had a renewal with a claim, you’ve likely been asked to provide details of the risk mitigation measures your client has taken. Arguably, the best time to ask this question is not at renewal, but right after the claim has occurred. That way, if you recognise the client’s measures are lacking, you can encourage them to implement further improvements. Kylie Moody explains, “A proactive approach to renewals with claims is always helpful and gives all parties time to consider their position. If the client is yet to undertake any steps to prevent similar claims from occurring, then your early approach will serve as a prompt for them to do so. Requesting this information early might be perceived as a burden, however once the reason is explained, it can be most helpful to start the process sooner rather than later.”

Rachael Drever also suggests this is a good time to flag a potential change in terms come renewal. “Be realistic in your advice to the client,” she advises, “if a large claim has been paid out, it is safe to assume there will be some impact on terms come renewal time.”

Risk management

Risk management can look different for each industry but there are a number of measures all businesses can practice to reduce the likelihood of a claim. In addition to improved record keeping practices, our underwriters concurred that regular and relevant staff training is one of the best preventative measures a business can take. Further, businesses may improve the recruitment process to ensure the right person is hired by conducting additional reference checks or if hiring inexperienced staff, ensuring appropriate monitoring of their progress. Lastly, businesses are encouraged to subscribe to industry publications and engage with relevant professional bodies to access a wealth of industry-specific advice.

Know your options

Despite fears, a rate increase following a claim isn’t always inevitable. “The factors that are considered at renewal are multifaceted,” explains Liam Stockley. There are measures that may be undertaken to potentially offset a rate increase, such as increasing the overall policy excess, creating a split excess arrangement or even limiting some elements of the ongoing cover by applying sub-limits or exclusions. Another way to soften a premium increase may be to offer a lower limit of indemnity, even if only for a few years, subject to any limit contractual arrangements the client may have. That said, it’s important to discuss the desired outcome with the underwriter so you’re on the same page.

No fault claims

If the client is adamant there’s nothing they can do to prevent similar claims from occurring, underwriters may ask for evidence of existing practices or processes to decide whether they share the client’s view. “We appreciate that in some claim circumstances, there may be very little the insured could have done to prevent the claim from occurring. In these situations, commentary from the insured documenting the ‘perfect storm’ nature of the claim would be helpful,” explains Kylie.

By getting on the front foot to discuss appropriate risk mitigation following a claim, setting a realistic expectation with the client and discussing the desired outcome with the underwriter, we’re certain renewals with claims will be much smoother.