Prepare early for tough renewals, Narim members told

Herman Kerremans, CEO at Howden Belgium, has advised Dutch risk managers to focus on supplying the best and most transparent risk information possible, while preparing fellow management for cost increases as tough renewals loom. Commercial Risk Europe interviewed Mr Kerremans about what risk managers in the Netherlands and wider Benelux region can expect during coming renewals, as members of the Dutch risk management association attended their virtual annual congress. Mr Kerremans joined Howden, part of the Hyperion Group, at the start of this year from JLT to launch the Belgian arm of the growing broker’s Benelux operations. He told Commercial Risk Europe that Dutch and Belgian risk managers can expect tough renewals in coming months in most key lines, as insurers struggle to maintain profits and revenues. “The hardening market continues, especially in property damage and business interruption with rate increases up to 40% or more. D&O is another challenging area for customers in the Netherlands as it is elsewhere in Europe. A number of insurers are reducing capacity, with a number of leading players cutting capacity from €25m down to €15m maximum or even less,” explained Mr Kerremans. “In D&O we are seeing rate increases in some cases of 50% to 100%, the worst-hit customers being those that are stock-listed and especially those with a US listing. Marine cargo is another line where we have seen premium increases in some instances. In general, casualty/liability has seen more selective rate increases,” he added. The key to securing the best possible terms and conditions during coming renewals is to start early and deliver the best possible risk information, said Mr Kerremans. Internal budget expectations also need to be carefully managed, he added. “To help secure the best possible terms and conditions in such a tough market, risk managers need to supply excellent underwriting information, more than ever before. It is also critical to start early and work in a transparent way as much as possible. It is also important for risk managers to manage the budget expectations of senior management, as the market is very volatile and unexpected premium increases are always possible. No one likes nasty surprises in a challenging economic environment like the one we are currently in,” he continued. Risk managers are also advised to actively look at options to traditional risk transfer. “In the face of such a harsh market, it is also important for risk managers to seriously look at alternative and more creative solutions such as captives, the use of higher retentions and look to other markets such as Lloyd’s, which can offer interesting options in a market such as this. The capital markets rarely offer a solution in the corporate insurance space, possibly in the future but not for now,” said Mr Kerremans. There has not been a rash of business interruption (BI) claims brought against insurers for Covid-19 in the Netherlands as has been seen in the US, the UK and France. But Mr Kerremans does expect the risk to be explicitly excluded in coming renewals to remove any potential uncertainty. “In general, in the Netherlands there is no BI cover in property damage policies for any business interruption caused by Covid-19, as long as there is no physical damage. Some customers may have a non-damage BI extension; it really has to be looked at on a case-by-case basis. The Financial Conduct Authority’s (FCA) High Court test case in the UK to try and clarify the situation with BI is an interesting development, but there is no such initiative in the Netherlands so far. I suspect that BI insurance will increasingly be explicitly excluded at the next renewal to avoid future uncertainty,” he said. The broker believes that state-backed insurance mechanisms are probably the only way to deal with pandemic risk but said there is no evidence yet of such an initiative in the Netherlands. “State-backed pools are probably the only potential and realistic solution for pandemic risks. But there is no concrete action plan from the government of the Netherlands as far as I am aware,” said Mr Kerremans.

Prepare early for tough renewals, Narim members told

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