From an insurance buyer’s perspective, it can sometimes feel as if premium prices change on a whim. But, according to Chris Bassler of Bassler & Co. Insurance, the truth is that the insurance market is cyclical in nature.

Chris, how would you define tendencies in the insurance market?

I would define the insurance market place as constantly fluctuating between soft and hard markets.

Can you give us a definition for those two markets?

A soft market, which is sometimes called a buyer’s market, is characterized by stable premiums, broader terms of coverage, increased capacity, higher available limits and competition among insurance carriers for new business.

A hard market, which is sometimes called a seller’s market, is characterized by increased premiums, diminished underwriting appetite and capacity, restricted coverage and less competition among insurance carriers for new business.

Where are we today in the cycle?

While many insurance buyers have enjoyed a soft market for years, the market is hardening.

What will this mean for an OOH company come renewal time?

Even the most prepared organizations will have to adapt to the hard market, and businesses can expect to face:

• Higher premiums
• Increased scrutiny when it comes to underwriting (e.g., underwriters asking for more information regarding a business’s risk and characteristics)
• Coverage restrictions (e.g., increased retentions) or exclusions
• Conditional or nonrenewal notices

Any strategies we can be deploying now, that might help us with an upcoming renewal?

The following are some strategies to consider to help navigate shifts in the market:

• Review your insurance program. Above all, check that your policies account for your business’s greatest exposures. An understanding of your coverage ensures you’re not overlooking any exclusions and will help you secure the right policy for your operations. During a hardening market, it may be necessary to make adjustments to your policies. However, those adjustments shouldn’t come at the expense of the coverage you need.
• Bolster your risk management efforts where possible. Doing so makes your business more attractive to insurers. Your broker can also help you review existing policies and procedures, and make suggestions on ways to secure favorable quotes.
• Know your loss history. In a hard market, underwriters will be especially critical when reviewing loss trends. Be prepared to explain the factors contributing to a specific loss and the steps you’ve taken to mitigate future losses.
• Budget wisely and plan ahead. In some cases, premium increases are unavoidable, and organizations should be prepared. Businesses should budget accordingly and take insurance costs into account alongside their other normal expenses.
• Work with the right insurance broker. During a hard insurance market, it’s vital to have a competent insurance professional advising your business. Be sure to partner with a broker that has strong carrier relationships and knowledge of your industry.
• Communicate with your broker early and often to determine how the hard market will affect your business. Starting the renewal process early can give your broker more time to secure the best coverage for your business.

If you have additional questions, you can reach Chris Bassler at cbassler@basslerins.com

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