It's not surprising that 2020 has brought about a hardening insurance market due to the extreme market changes. Many of these changes are due to the tumultuous ongoing events like the COVID19 pandemic. There have been times in recent history that the world has already experienced a hardening insurance market.

In 2020, the wildfires and hurricanes on both sides of the globe have brought about many unknowns in business insurance sectors. But it's surmised that even if you eliminated the COVID19 global pandemic, business insurance sectors were already facing challenges due to the hardening market in general. Please read on if you want to learn more about dealing with adversity and why it often takes a balance of strength and compassion to weather through it.

Also, there is a way forward where you can not only weather through insurance challenges, but you can also find a way to achieve remarkably superior outcomes. The excellent results can occur even in a hardening market within the insurance sector.

Hardening Insurance Market

The concerns and changes that occurred in 2020 started hitting almost as soon as the new year began. Bush fires in Australia killed over 400 people and created total devastation to over 45 million acres. That equates to approximately 20% of all of Australia's forests. 

Preliminary estimates of the devastating fires list the cost at over £103bn to the Australian economy. If that wasn't enough, in 2020, the United Kingdom has experienced flooding on a magnified level. The Ciara and Dennis storms created more flooding in one month of 2020 than over the past 250 years. 

The property damage from the joint storms in the UK totaled over £360m. In August of 2020, the insurance sector learned that a panel of federal judges refused to consolidate the hundreds of ongoing lawsuits filed against major national insurers for COVID19 coverage. The judges felt that litigation would be more effective and efficient if current cases stayed with the respective judges who were already in review and being determined rather than organizing the cases all over again. 

Hardening Market 

As if the fires in Australia, COVID19 pandemic, and UK flooding weren't enough for insurance market sectors to handle, at the end of 2020, California fires claimed over two million acres of forest. All of the natural catastrophes, global political unrest, combined with the COVID19 pandemic, have contributed to insurance market sectors' increasing insurance payments. The consumers have borne this increase, which has added to insurer investments that continue to track in a downward trajectory. 

Insurance investors are justifiably concerned about their investment returns based on what they perceive as a future financial liability. A future financial liability that increases every time there are more businesses filing class action litigation.

Managing a Hardening Market

Uniquely the challenges of 2020 have led to some corporate TPA claim sectors to review, moving the cost of the claims and claim litigation off of the balance sheet. The TPA claim sectors would push the cost of claims and claim litigation off the balance sheet by taking a more agile approach in insurance requirements. An excellent way to start managing a hardening market is to make the risks more appealing to underwriters. 

The pandemic doesn’t offer any previous market modeling to draw from, so many risk professionals can focus on modeling a more appealing approach for underwriters. By employing active risk management options, you increase awareness and introduce a proactive management style in dealing with the risks. You may also want to start building up relationships with any brokers you know or deal with because brokers and risk management insurance professionals complement each other’s business structures. 

It’s best if you speak to brokers, if possible, before carrier renewal dates. That allows for better budgeting. It also provides a mode of open communication between you and brokers, resulting in ways to work with carriers in new ways. 

Strategies for Managing Hardening Market 

One way of incorporating these changes would be to place a high deductible, which would lower premiums. The reduced premiums would allow for an increase in establishing new captives, virtual captives, and mutual captives. This would also enable businesses to move the cost of claims handling off their balance sheet, allowing for greater investment return for insurance investors.

The hardening insurance market conditions also allow for a unique opportunity to provide training and coaching for younger insurance agents and demographics. Coaching and training that offers guidance in navigating and even prospering during such challenging times are beneficial to all impacted markets. Coaching and training can include how solution insurance managers can handle the ongoing pressure they are under in a hardened market.

Solution insurance managers are also under pressure to reduce or, at a minimum, maintain expenditures while supporting the challenging and more comprehensive business moves needed. These are business moves needed that are already wrapped in detrimental budget conditions. 

Some Insurance Solution Options

There are positive financial solution options, even in a hardening insurance market. Gallagher Bassett offers some of the best solutions by expert professionals who help guide and guard insurance services beyond the ordinary. Gallagher and Bassett is a point of call when you're ready to find innovative ways to find innovative ways to combat the ongoing stringent underwriting. 

Finding the right way to help stop the reductions being seen in the insurance market cycle's capacity is just the beginning. Reach out to Gallagher Bassett when you want to discuss corporate insurance claim options. Or perhaps you need to start achieving the overall better outcomes you need in a hardening market. 

No matter what you need at Gallagher Bassett, there's a claim handling service that can offer you options and solutions to some of the most disconcerting insurance sector changes. The pathway to achieving superior results in a hardening insurance market is one click away. The end of the story of 2020 is still being written, so when there's one chapter that can result in more positive outcomes for insurance sectors, isn't that a chapter you want to help write?