Insurance Advisory Newsletter – Navigating General Liability Policy Renewals From The Insured’s Perspective : April 2024
Renewals of general liability insurance policy (“Liability Insurance Policy”) are due on an annual basis. The renewals must be approached with a clear understanding of the “hows” and “whats”, marking an opportunity to reassess the Company’s coverage comprehensively, adapt to evolving needs, and secure continued protection against certain anticipated projections and unforeseen risks.The Liability Insurance Policy renewal involves assessing coverage needs and communicating effectively with insurance providers to navigate the renewal process successfully.
ASSESSING POLICY EFFECTIVENESS: ALIGNMENT WITH ORGANIZATIONAL GOALS
A Liability Insurance Policy needs to be aligned with the organisation’s objectives and risk exposures. Before renewing a Liability Insurance Policy, it’s crucial to consider how it fits into the organization’s broader picture, including the coverage and its impact on finances, customer satisfaction, and long-term adaptability. Policyholders must understand their coverage needs, including limits and deductibles, to ensure they match their current situation and risk appetite. Considering all the changes your organization has gone through since your last insurance renewal will help you identify any gaps in coverage or areas where you might need to adjust your policy. Discussing these aspects with your insurance provider before renewing would help so they can offer advice and make necessary changes to your policy.
The timing of your renewal varies depending on factors such as the size of your business, the complexity of your risk, and the insurance providers you’re dealing with. Therefore, getting an early heads-up about policy renewals is crucial for organisations. Firstly, it lets organizations plan well by checking if their current policies still fit their needs and goals. Secondly, an early notice allows them to fix any issues with their Liability Insurance Policy before it’s too late. And finally, it gives them time to discuss with the stakeholders involved, like brokers and lawyers, to get their thoughts and advice. It is recommended to start the policy renewals at least 3-4 months before it expires. Doing this would give you time to align the insurance policies to your organizational interests, find better coverage and premium options and ensure timely renewal.
LIABILITY INSURANCE RENEWAL, COMPLIANCE AND RISK ASSESSMENT
Organizations are often bustling hubs of activities and amidst the chaos, reviewing insurance coverages during renewal is challenging. It is advisable to loop in experienced insurance professionals to streamline this process and ensure you have the right coverage at the optimum premium. Key points to be noted for Liability Insurance Policy renewals.
1. Assessing Contractual Risks: Risk exposures in the customer contracts need to be aligned to ensure that the sum insured limits and coverages are aligned. 2. Ensuring Compliance: The renewal terms need to be aligned with the legal requirements, industry standards, and regulations.
3. Proposal Forms Review: The proposal forms contain the base information for the entity relying on which insurance quotes are provided. The insured entity has to provide vital insights into the organization’s insurance needs, risk profile, and coverage preferences and facilitate effective risk assessment. 4. Identifying risks: Evaluating policy terms, limits, and potential scenarios is essential to spot legal risks. By addressing these upfront, organizations can implement strategies to minimize liabilities and proactively manage risks. 5. Mergers, Acquisitions, and Change in Ownership: Mergers and Acquisition activities cause a change in ownership and shareholding patterns of an organization and constrain changes in policies like Directors’ and Officers’ Liability Insurance. If any such activity is projected at the time of renewal, coverages like an extended reporting period and run-off cover should be procured to be prepared for such transactions. 6. Gap assessment: It is essential to review, analyse and map the policies with standard coverages in the market to ensure there are no gaps in coverages in the event of potential liabilities and claim-like scenarios.
IN SUMMARY
In summary, navigating insurance renewals requires understanding key factors like business risks, compliances, risk evaluation, and identification of liabilities to safeguard insured entities. A mindful eye on the aforesaid factors enables effective risk management, procurement of an optimised Liability Insurance Policy and timely renewal of policies.
