Background

Recently, a major Australian ASX 200-listed company (for client confidentiality reasons, we cannot mention their name) contacted Risk Advisory Services (RAS) seeking independent advice on its property insurance arrangements. 

The company had been experiencing year-on-year increases to premiums, insurer-mandated increases to deductibles, and a growing number of restrictions in cover.  This was driven, in part, by hard insurance market conditions. However, when the company experienced multiple significant property losses, the insurance programme did not respond as anticipated. 

As a result, the client incurred millions of dollars in uninsured losses.

RAS was then engaged to review the company’s current property insurance arrangements and prepare a report identifying practical recommendations designed to improve the risk and cover match, reduce costs, or improve processes and procedures.

Project Scope

RAS prepared a detailed request for information for the client specifying the insurance and risk management documents required to commence the review.  The project scope included:

• • Reviewing the accuracy and suitability of information declared to insurers,
  • Assessing the match between the client’s risk profile and the coverage in place,
  • Providing commentary on the broker’s overall service performance.

Results

Our detailed review identified several areas of concern including indemnity periods that appeared too short, critical sub-limits that were too low, and uncertainty regarding accuracy of some renewal data. 

RAS then collaborated with the client and the broker to prioritise coverage improvements and ensure that renewal objectives for the property programme were documented and achievable. 

The end result of our engagement resulted in:

• • Client obtaining support from its executive team to complete a comprehensive business interruption review which enabled more informed decisions to be made regarding indemnity periods and validation of figures declared to insurers;
  • Critical operations/locations were identified that had previously been overlooked, resulting in changes to the insurance programme and internal business continuity plans to recognise these exposures;
  • The client developing and adopting a more mature approach to its insurance arrangements; and
  • Improvements to the renewal information which enabled the broker to obtain a premium rate reduction and increase critical sub-limits including Flood and Removal of Debris.

RAS fostered greater collaboration between the client and its broking team and the client was thrilled with the result of this review. 

The team at Risk Advisory Services pride themselves on providing completely independent advice. If you would like to learn more about our insurance review services, please contact us today on either of the options below.