Lloyd’s Chairman Sax Riley told an audience of 600 insurance professionals in Milan, Italy that the way in which business organizations manage the risks they face is becoming an increasingly important factor in the price they pay for their insurance.
Riley stated that, contrary to the 1990’s when low rates were the norm, the return to hard market conditions in the industry meant that insurers were now able to offer greater discounts for good risk management. “We are now seeing a return to the concept of payback for improvements to risk management practice. Right now, a good risk manager is worth his or her weight in gold.”
“In the soft cycle of the mid-to-late 90s, it was virtually impossible to discount premium rates that were already cut to the bone,” Riley continued. ‘”Now, as high rates are encouraging insurers and their clients to work together closely, insurers have more opportunity to encourage and reward best practice risk management techniques.”
He indicated that with the discounts available insurance intermediaries have found it much easier to sell risk management advice to their clients, and pointed out that “risks that do not aggregate or correlate are currently extremely attractive to the market in this post-September 11 period, it is increasingly important to examine ways of creating risk separation and looking at risk in different ways.”
As an example Riley pointed to the availability of price discounts of up to 35 percent in Texas homeowners policies for fitting approved hail resistant roofing.
The bulletin went on to note that “Businesses can receive discounts on the price of their insurance for a wide range of risk management measures including fitting improved fire safety equipment, improving security, instituting new safety policies for staff, or retaining a greater proportion of their own risk.”
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