Navigating a two-tiered Market

According to the Insurance Marketplace Realities 2022 report by Willis Towers Watson, the two-tiered marketplace highlighted in 2021 for commercial property insurance will remain a reality in 2022.

A two-tiered marketplace means properties are classified as challenged occupancies or non-challenged occupancies / low risk. Not surprisingly rates are better for lower risks and tougher for less attractive risks.

Operators can expect rate increases in 2022 relative to their risk level…
“Property rate increases are decelerating, especially for better risks; those buyers can expect increases of 2% – 10%. For challenged occupancies, rate hikes are forecast at 15% or more, which represents a continuing decline in increases over recent renewal cycles.”
2022 is All About the Data

This year’s report goes on to say,”The new insurance marketplace is underpinned by risk analytics. It’s based on the unique and expanding insight available about perils across the spectrum and the greater amount of data that insureds have access to about their own exposures in particular.”

In other words, to negotiate with underwriters and be placed in the right tier for your operation, operators will need the data, necessary to have a data-driven discussion.

The report goes on to provide the following specific guidance:

  • Increased information will help buyers more accurately model any changes (e.g., reduction in limit or increased retention) and help assure that risk management strategies reflect organizational risk appetite or corporate philosophy.
  • Analytics provide important guidance as buyers align offerings in the marketplace to their rapidly shifting risk transfer needs.
  • Buyers need to distinguish themselves from their peers, especially in challenged occupancies. Risk managers must help tell this story and provide the necessary data to satisfy underwriters’ insistence on robust underwriting information.
  • Underwriter meetings are encouraged; telling a story of mitigation efforts, improved loss control measures and disaster recovery/business interruption plans remain critical in differentiating a buyer’s risk.

Data

Data

Data

Guidance That’s Easier Said Than Done!

The challenge for both non-challenged occupancies and challenged alike will be in their ability to access the data.

The reality is, most simply can’t access the operating data, necessary to complete the risk analysis, and negotiate rates in line with your risk level. The data is still on paper, lost in filing cabinets, inboxes, and trash cans.

Reducing Risk in Physical Operations

To be considered non-challenged occupancy or low risk and ultimately negotiate lower rates, operations must provide the data necessary to prove they have done everything possible to minimize or avoid the risk.

Physical risk comes in many different forms, but what’s consistent across all physical risks is the requirement for staff to physically complete a task which is absolutely necessary to avoid or minimize the risk.

Consider these common operating risks and what must be done to avoid or minimize them:

  • Fire and smoke: All fire extinguishers, exit lights, sprinklers must be physically inspected monthly to ensure availability and performance on demand.
  • Flood, Water, and Mold: All boilers, heaters, plumbing, water filtration systems, unground walls, doors, and windows, etc. must be inspected and maintained to ensure no leaks, or pools of water causing water damages and mold.
  • Storm Damage, Hail, Wind, Hurricane, Tornado, etc.: Ensure all doors, windows, lawn furniture, etc. are properly secured to reduce the severity of the damages.
  • Vandalism and theft: Ensure all entrance ways are properly secured and all isolated locations are closely monitored.
  • Food-born illness: Ensure all refrigeration and cooking tools are maintained at the proper temperature.
  • Environmental Exposure: Ensure all chemicals are stored in a secure location.
  • Hygiene Infection: Ensure the water in pools and hot tubs is maintained at the proper temperature. Bathrooms, showers, and change rooms are properly cleaned.

While only a small sampling of the operating tasks that must be done day-in-day-out to reduce risk, accessing the data to prove to the underwriter that your operation has done the job is not so simple. 

Today most frontline teams are still managed like years gone past:

  • Policies and procedures are still listed in manuals.
  • Responsibilities and to-do lists are distributed on paper or via email.
  • Compliance data is collected in checklists or logbooks, stored in spreadsheets, or in filing cabinets.
  • Compiling the data is manual and error-prone, often transcribed from paper to digital for future reference.
  • Each department is working independently with unique methodologies and reporting styles.
  • Data can’t be verified and must be taken at its word.
  • Data is always outdated and not a current reflection of current practices.
  • Compliance is managed with inspections, and sometimes inspections of inspections!

Continuing to rely on these antiquated methodologies is exposing operations to an increase likelihood that:

  • Something will be missed, and something will go wrong resulting in:
    • Personal injury
    • Physical damages
    • Medical costs
    • Settlements
    • Regulatory fines
  • Insurance claims will be denied due to lack of data and rates will continue to increase.

It’s Time to Digitally Transform Operations, and Enable Data Driven Discussions

Introducing Command Center from Zendelity which combines the flexibility of near field communications (NFC) with the smartphone, and our smart work plan management platform to reduce operating risk.

It is a cost-effective, mobile solution designed for frontline teams and ensures adherence to all operating requirements.

It automates the communication of operating procedures to ensure important work items are not missed.

It enhances visibility and supports a proactive approach to management with a real-time view of compliance.

It creates a system of record to help identify opportunities for improvement while also providing the data necessary to engage in data-driven discussions with insurance providers, regulators, and those that define brand standards.

In essence, it simplifies operations!

Introducing Command Center, by digitally transforming the frontlines we can help save lives, money and time for physical operations of all shapes and sizes.

Learn More About Command Center