In the last post in this series, we talked about how to approach the market to obtain agreement to a designed insurance policy.
In this final post of this series, we talk about how to manage the designed program for the long-term.
At the beginning of this series on designing an individual professional liability policy, we suggested that designing policies has become more necessary because “business, businesses, risks, and risk management have all become more complex and they now also change faster than they used to”.
Since complexity and frequent change are not going anywhere, a designed insurance policy is unlikely to remain ‘perfect’, absent alteration, over the long term. Companies – insured and insurer – change, relationships shift, risks emerge and morph and even insurance strategies improve; the coverage must be adapted accordingly.
The first thing to say about managing an insurance program over the long-term is that a buyer shouldn’t wait to have something to reveal or ask for before arranging a meeting with their insurer(s). Meetings between buyer and insurer should be regular occurrences. We advocate for once-a-year meetings, though every other year can be acceptable.
We think that any bigger gap between meetings however, undoes too much of the benefit derived from the design process. Working together to refine the designed policy establishes a partnership relationship between buyer and insurer and maintaining the sense of partnership is the key to keeping a program on track over time.
It is for this reason that face-to-face meetings are also, almost always, preferable. Video, then phone conference calls are next best, while emails should be kept for admin and detail, unless there really is no option.
As with any meeting, every meeting between buyer and insurer should have an objective and an agenda. Though there can be any number of different kinds of objective, re-confirming the partnership is almost always the primary objective; it is rarely less than the secondary objective.
Re-confirming the partnership is simply a matter of both buyer and insurer up-dating each other on what is going on in their worlds. We say ‘worlds’, not businesses, because, as the relationship develops, far more than just business connects buyer and insurer.
Having said that ‘worlds’ is a better frame of reference than ‘business’, it is helpful if the buyer – at every meeting – can frame their up-date in the same terms that led to the objectives for the designed policy in the first place. This means discussing details of what the firm has been up to since the last meeting, what may have changed as far as their risk is concerned and how their relationship with their risk may have changed.
We also advocate that, where there may be some indecision as to what to disclose, more is better. Not everyone agrees with this approach, and there can be very good reasons to keep some kinds of information confidential. But we think that a partnership can head towards trouble when either party suspects the other may be withholding information that might be relevant to the partnership.
The other items to be discussed will then be driven by circumstance. Change requests should be framed in the same terms used to design the policy in the first place. New claims or claim up-dates should, ideally, be discussed with as much candour as possible.
Meetings should also not be restricted to current insurers. The buyer should meet potential new insurers regularly. This is because, for example, no insurer has maintained a completely consistent appetite for ever and there will always be the opportunity or the need to bring new insurers on to a program to keep it fresh.
If meetings are arranged regularly, well prepared for, and new insurers are introduced when possible or necessary, the designed insurance program should last the test of time. We have looked after some clients for over 20 years using this approach; one for 30 years.
Note: This series of posts concerns the design process for one company’s professional liability policy. We use professional liability to demonstrate the process because it is the most common policy we design. We use the same process for every policy we design.
Disclosure: We specialize in designing insurance policies. In addition to professional liability, we also design – for example – sexual abuse liability, cyber, employment practices liability, financial institutions and crime coverages.