- By Thomas Laffey, AJOT Insurance buyers have smiles on their faces these days, and why not? Property and casualty premiums continue their downward spiral and there’s no end in sight. Renewal terms negotiated with insurers routinely result in improved terms with premium reductions that average 12% to 15%. The marketplace is as volatile as I’ve ever seen it in the past ten years, as a frenzied competition drives pricing downward. My guess is that this soft market will continue throughout the year, and well into 2011. Now is the time to test the marketplace for alternative proposals. Insurers are in the midst of releasing their 2009 underwriting results. They made billions in profits despite a depressed equity market. Those insurers who have lost market share to their competitors will be especially aggressive in their attempts to win back lost premiums. That’s the best news that logistics insurance buyers can hear. Happy days are here again! Venturing into the insurance marketplace in times like these requires carefully planned marketing procedures. Insurance broker selection is critically important. Whether you utilize the service of your incumbent broker, or seek out new competing brokers to represent you, select only those brokers who have experience in marketing the transportation and logistics exposure. If a broker is unfamiliar with your industry and doesn’t know the difference between an air waybill and a storage receipt, how effective is he going to be? Remember always that your objective is not only to realize a 10% to 15% reduction in costs, but to achieve renewal terms that do not contain troublesome exclusions with coverage as well. Specialists are much more likely to achieve both objectives. The choice to remarket your program is not without peril. If it is done properly, the results will be evident. If it is done poorly it will be a waste of time and effort. If you have confidence in your current broker’s capability, you may wish to use the broker exclusively to remarket your account. This can be achieved by providing the broker with a Broker of Record letter to the marketplace which confirms the broker‘s exclusivity while acting on your behalf. The advantage that you gain by doing this is that insurors will recognize the authority the exclusive broker has in negotiating terms on your behalf. Insurors won’t feel like they are spinning their wheels in preparing proposals for competition who may or may not have a reasonable chance of unseating the incumbent. This procedure is becoming more commonplace today. The disadvantage is that the buyer may not obtain an objective assessment by the marketplace, should the broker be less than forthright in preparing your submission to insurers. Not likely, if you deal with honorable brokers, but it’s happened before. Ask to see a copy of the broker’s submission to the marketplace, together with a list of the insurers that they are contacting. Obtain the names of the individual underwriters who are preparing proposals. Insist that the broker visit the marketplace at least 60-75 days in advance of your renewal or anniversary rating dates. Monitor the broker’s activities during this process, requiring them to provide you with a status report of their activities every 30 days. Insist that final proposals be received at least 21 days prior to the expiration date so that each proposal can be reviewed in detail. If you choose to utilize the services of competing brokers, have each broker list those markets, in preferential order, that they wish to use. If possible, try to assign their first and second choices to those brokers who respond. Give each of the brokers an exclusive Broker of Record letter to their choice of insurers for the marketing of your account. Impose the same discipline upon the competing brokers, requiring routine status reports of their activities. Depending upon your own schedule, you may wish to visit the offices of competing insurers, if they are preparing their proposals locally.