How to Arrange Your Business Insurance in a Hard Market

18 Nov

It is well documented that the insurance market is hardening at a rate not seen for the last 20 years. This makes the already time-consuming and arduous task of arranging your business insurance even more challenging. In this article, we will look at the hard market, what it is and why it is occurring, and how we can help you navigate this complex market.

What Is a Hard Market?

Hard market conditions mean insurer capacity is reducing and competition is withdrawing, making it more difficult to source insurance cover. This in turn drives premiums up. To ensure they are financially secure enough to pay customers in the event of a claim during a hard market, insurers will implement stricter rules with regards to issuing new policies, limit the number of new policies they sell and review the premiums they charge.

What Drives a Hard Market?

There are many contributing factors that cause a hard market, including:

  • The insurance company market and Lloyds of London both experiencing major market withdrawals, in combination with unprecedented mergers and acquisitions, has reduced risk capacity and competition.
  • Problems within areas of specific sectors, such as Professional Indemnity, Liability, Property, Real Estate and Marine.
  • Increased global reinsurance rates for leading insurers as a result of substantial insured catastrophe losses over the past few years.
  • Increasing claims costs or inflation.
  • Low interest rates as a result of stock market losses brought about by COVID-19 making historically low investment returns on insurers’ retained premium worse.
  • COVID-19 is impacting some areas harder than others. For example, the Directors & Officers market is being challenged by increases in claims relating to business solvency, employment law and health and safety matters, and general governance issues.
  • Solvency II regulations, requiring insurers to hold additional capital to cover potential losses.

7 Tips for Managing Risks and Controlling Costs

It may sound daunting, but there are steps that you can take prior to your insurance renewal date to prepare and help the process run smoothly.

1. Start the Process Early

Whether you are an existing Thomas Carroll client or not and would like us to review your insurances, it is worth starting the renewal process early. We recommend getting the ball rolling at least four months prior to your renewal date to allow enough time to secure the best cover and most competitive premium for your business insurance.

To gain a thorough understanding of your business and its risks, insurers may want to conduct a pre-cover survey. Together, we’ll set a clear deadline for getting the terms back so that we can find the right solution for you.

2. Correctly Value Your Assets

Unfortunately, underinsured businesses are more common than you might think. Independent research commissioned by the British Insurance Brokers’ Association (BIBA) has revealed that millions of small and medium sized enterprises (SMEs) across the UK are failing to protect themselves and their employees in the event of emergencies such as fire, flood or an act of terrorism. This means that in the event of serious damage, the level of insurance cover would be insufficient to meet rebuilding costs.

Under the Insurance Act, you are responsible for ensuring that your risks are accurately represented and providing correct values, but we can help you identify any shortfalls. This is an essential step in sourcing adequate cover to protect your business.

3. Consider Emerging and Evolving Risks

New threats to your business constantly emerge and should be monitored continuously. In its 2019 Future Risks report, AXA reported that climate change, cybersecurity and geopolitical instability were the top three emerging risks for the next 5-10 years. A prediction of COVID-19, pandemics ranked within the top ten emerging risks in the same report. As your insurance broker, Thomas Carroll will take a proactive approach to emerging and evolving risks to ensure your business is adequately protected now and in the future.

4. Implement Additional Risk Management Controls

Consider adopting additional controls, such as health and safety, employment law or security measures to manage your business risks and secure competitive pricing and terms. Steps being taken to mitigate risks are favourable in the eyes of insurance underwriters and can be reflected in the premium offered.

Our Chartered insurance brokers can carry out a thorough Risk Mapping process to identify and manage your business risks, reducing the risk transferred to the insurance market and creating a bespoke policy for your needs. We will work with you to help control the impact of internal and external factors on your business, ensuring you always have the best cover.

5. Remember Your Claims History

Your claims experience is vital for receiving accurate quotations from insurers. Without it, your insurance broker will not be able to secure confirmed offers from insurers, but rather an indication of premiums subject to you providing your up to date claims history.

Given that your claims experience can demonstrate improving risks, it can play a key role in driving down your premium. To improve the way your business handles workplace incidents and claims, our Claims Defensibility Health Check can support you in building a strong health and safety culture within your organisation.

6. Decide What Is Most Important to You

Whereas a fair price is important, a solution that is tailored to the individual needs of your business is crucial. You could consider restructuring your programme, but do not just reduce cover to save on your premium as this could leave your business exposed and unprotected.

We will take the time to understand your businesses to help you identify the additional information that insurers will need outside of the traditional proposal form and get you the best terms. With your business’ best interests in mind, we may offer recommendations on restructuring your programme and will discuss these with you. For example, we might suggest ‘layering’ smaller limits across a range of insurers or changing your excess/deductible structure.

7. Build Relationships

Lastly, whilst it may seem proactive to take your insurances to market on an annual basis, this is only encouraged if you have a specific issue with your current providers. Strong and longstanding relationships are preferable to underwriters and insurers will often reward businesses that review every three years, rather than switch providers annually, with attractive terms. As mentioned at the start of this article, when the time comes to renew during a hard market, make sure you start early.

Can We Help?

If you have any questions or would like Thomas Carroll Brokers to review your current business insurance cover, please contact the team today on 02920 853788 or email We are fully operational from home and on hand if you need advice.