As the insurance market begins to harden, with insurers boosting premiums or seeking stricter terms for some types of coverage, risk managers for the most part are accepting those changes.
A recent survey by Hanover Stone Partners shows only a minority of companies have responded to price hikes or stricter terms by switching their insurer or broker or adjusting their retentions. But John Kelly, managing partner at Hanover Stone, a network of risk management advisers and services firms, predicts that as the insurance market continues to tighten, more companies will look for ways to contain their costs.
Property coverage was a line where companies saw both higher prices and changes in terms. On U.S. property coverage, 72% saw premiums rise on renewal, with 14% seeing increases of more than 15%, 29% seeing hikes of 6% to 10% and 29% seeing hikes of 1% to 5%. And insurers offered higher retentions or deductibles to 29% of the companies, and both restricted terms and higher retentions to another 14%. While 72% of companies made no changes, 14% agreed to more restrictive terms and 14% adjusted their retentions or deductibles.
For global property coverage, 75% of buyers saw premiums increase, with 25% seeing increases of 11% to 15% and 25% seeing hikes of 6% to 10%. Companies renewing global coverage were not offered more restrictive terms, though. Their response to the price hikes: 33% changed carriers, while 67% made no changes.