Buyers advised to prioritise long-term partnerships over price

Despite the temptation to constantly change insurers offering ever lower prices in the ongoing soft market, buyers should prioritise the benefits of long-term relationships with risk transfer partners and the added value they can deliver, according to industry experts at CRE’s latest Risk Frontiers event.

At the seminar held in association with the Belgium and Dutch risk management associations Belrim and Narim, speakers stressed that the cheapest cover is not always the best option. They urged risk managers to make the most of the growing array of services offered by insurers fighting for their custom in tough market conditions.

Gäetan Lefèvre, president of Belrim, said long-term partnerships between insurer and insured are desirable. “Capacity is there so use the capacity to protect your assets, not to make profits but to protect yourself and ensure you have a partner in case of a problem. So it is important to develop a partnership and long-term agreements,” he said at the seminar in Brussels.

He stressed, however, that this message is not always easy to sell within companies looking for short-term gain and the cheapest cover. A balance needs to be struck between price and partnership, he advised.

“I want to have the privilege of a long-term agreement and partnership but it’s not always an easy message to give to an executive committee because the executive committee is looking more at the short term. So we need to find the right balance,” he said.

Adri van der Waart, Insurance Manager at Arcadis and secretary-treasurer of Narim, gave a similar message.

“I told my CEO ten years ago I want to have a long-term relationship with my insurers and he said I don’t like that I want to have profit. But the most profit is to have long-term relationships,” he said.

He also noted that securing cheaper cover and staying with the same insurer can go hand in hand.

At the event partly focused on European renewals, Herman Kerremans, chief broking officer & managing director Specialty Business at Aon Risk Solutions, said there are no signs of the soft commercial insurance market ending anytime soon.

To make the most of these conditions insurance buyers should consider many factors when choosing their insurer. He suggested that long-term partnership and the services on offer should be prioritised over simple price comparisons.

“I know that there is always someone willing today to take over from your incumbent insurer at a lower price. I have even seen it for loss making deals. But how important are long-term relationships for you? Do you want to hop from a to b to c every year? Probably after sometime the insurer may look at you as not a very reliable client,” he told the audience.

“It is not only the products, wording and the coverage but everything that goes around that to consider. Are you getting the same claims service, risk analysis and loss engineering services [if you change insurer]? Sometimes you have this and you like it and with a new carrier it is gone because of lack of people or ability to provide these services,” he continued.

“My message is not to tell you to stay with your incumbent. My message is try to get the best out of this market-I always advise that, to the extent possible, with your incumbent insurers. Of course, if you don’t want your old insurer you need to look for somebody else and sometimes there is no other solution to change from a to b,” he added.