An article in the ever-popular online news platform, Insurance Business, took our eye recently. They reported on one of the ever-present problems with the insurance market: oversupply and the challenges that it brings.
In the construction sector recently, there have been less frequent catastrophe claims, and a reduction in reinsurance costs. This means it’s starting to look attractive to insurers, with existing underwriters looking to increase their share and new entrants attempting to build a customer base. All this leads to increased competition, and consequent lower rates and premiums, usually with better excesses and wider cover opportunities.
Winners and Losers
The problem with competition isn’t that it’s great for clients – it is – but that it’s not so great for insurers – there’s pressure on their bottom line. With less premium coming in through the front door, there’s less to pay the claims that they promise to when they accept a policy. While clients are always happy to pay less money for insurance cover, there’s a scramble to make a profit on the reduced premium pool.
As the article notes, disciplined underwriting is paramount, but as we’ve seen over many insurance cycles, discipline is one of the rarest of commodities. To remain profitable, insurers need to review their complete offering regularly, and ask themselves if it is:
Relevant
Competitive
Quickly adaptable
Streamlined
If the answer to any of these is ‘no’, pressure is added to the bottom line, and turnover and profit will reduce, or worse, disappear, along with clients.
Controlling the uncontrollable
It’s not just the construction sector. All areas of insurance are prone to the cyclical nature of a capital-driven industry operating in a chaotic real world. One way to maintain control over an insurance cycle is to invest in a software platform that can offer solutions to the questions posed above.
At InsuredHQ we’re confident that our low-cost product can quickly provide the competitive edge you need. It comes packaged three different ways to streamline your input and client/policy handling, and provide relevant database information, and can be individually adapted for any special features you may require, including underwriting automation.
Contact us today to discuss your requirements, and we’ll be pleased to demonstrate our proven, cost-effective systems.