If your New Year’s Resolution was to see fewer cancellations on your insurance policies, YOU’RE IN LUCK! Some of the worst insurance experiences follow the opening of a non-renewal or cancellation letter. Think about it, you call your agent to explain the situation, then wait for them to either move your policy or coax your carrier into reinstating or rewriting your account, then sort out everything on the accounting end, and so on. How much time are you wasting?! How much time is your agent spending on reinstating your policy instead of helping save you money in other ways? In most cases, these cancellations can be avoided with a little guidance and some elbow grease, which in our opinion, is preferable to an administrative nightmare. Let’s dive deeper into the why’s and the how’s.
There are a few notable reasons why an insurance company or carrier might non-renew or cancel a policy - including, but not limited to: Unfavorable Loss History, Payment History, Audit Compliance, Falsifying Applications, Exposure Changes, Carrier Appetite, or Market Conditions. Most of these are in the policyholder’s control, though there are a few uncontrollable factors at play. Insurance is meant to transfer your financial liability in the event of loss, but if you rack up too many losses then your policy is perceived as “high risk” and you could be added to the list for non-renewal. High risk accounts are much harder to place with standard carriers, meaning you might wind up with a more expensive and more difficult to service policy through a broker. Not only do carriers want accounts with favorable track records, they also are more eager to write accounts that pay in full or on time. String together a book of clients who pay at the last second to avoid cancellation or skip payments regularly, and carriers are quick to look for “more reliable” clientele and give “troublemakers” the boot. Speaking of “troublemakers”, carriers are quick to pull the cancellation trigger when they’ve been dupped or standard procedures aren’t adhered to. Accounts who omit or falsely identify their business operations and exposures on an insurance application will find themselves looking for a new carrier as soon as a “misrepresentation” has been discovered. Additionally, not adhering to or making a timely attempt at complying with carrier recommendations after a loss control survey can lead to a cancellation or non-renewal at the end of a policy term. All cancellations or non-renewals hold more significance now due to the “hard market” the insurance industry is currently experiencing. During a hard market, carriers across the board become more strict with account exposures they are willing to risk accepting, making it much more difficult to place certain industries. Industries with higher than average rates of loss, namely the construction sector, will either have a hard time finding a policy home or will pay much steeper premiums to obtain needed coverage- even with a clean loss history. Even if you’ve been with a carrier for any number of years prior to the market turning, you could still face non-renewal in a carrier effort to make room for less risky exposures. Finally, while speaking of exposures that carriers are and are not willing to write - any changes to operations can impact underwriting guidelines and availability. For example, if a hardware business one day decides to add an LP exchange or refill service, a carrier may decide that the added exposure makes the entire business too risky to insure and may submit a letter of non-renewal or cancellation to avoid the chance at a loss.
With all of this said, it’s not all slammed doors and astronomical premiums for businesses with more robust exposures. Part of our responsibility as agents is to fight for your right to affordable* coverage and bring awareness to any loss saving measures. For example, our agents are able to provide tailored risk management strategies after learning more about present exposures and touring a facility. We are able to identify loss indicators to actively mitigate them before they become the root cause of a claim and monitor changes in operations and floorplans in a continued effort to maintain a safe workspace. Agents are also able to advise on whether a claim should be filed for a particular loss, especially regarding deductible amounts. Often times, we see new clients with a high number of losses because they filed claims for minor losses that could have been handled internally. A great way to avoid cancellation is selecting a payment plan that works best with your current accounting process. Luckily, most carriers and lines of coverage will give you varying options on payment schedules including: annual, quarterly, and monthly plans. Insurance carriers encourage clients to enroll in Electronic Funds Transfer (EFT), where funds are withdrawn automatically each billing period to guard against missed or forgotten payments. Lastly, we always encourage prospective insureds to walk through initial and supplemental insurance applications with a licensed agent to ensure everything is showcased accurately. Understanding your business is the best way for an agent to make sure you are insured correctly. As previously mentioned, any misrepresentations of what exposures the carrier is taking on could lead to unpaid claims and cancellation notices in your mailbox. In summary, working to maintain a clean and safe work environment, choosing the billing plan that works best for you, and taking the time to make sure your agent understands your business operations, can all help avoid the dreaded cancellation notice. Always remember, when in doubt about your insurance, ASK YOUR AGENT!
Still not sure why you’re having to shop around for a new policy? Give an NBIG agent a call today to discuss your unique exposures and how to cover them properly!