A couple of weeks ago, I was talking with an underwriter who was just coming up for air after being deluged by 7/1 renewals. He was lamenting the semi-annual crush of 1/1 and 7/1 renewals.
We, as an industry, have to ask ourselves why we allow the 7/1 and 1/1 bottlenecks to occur.
Long ago, when I had my underwriting facility, it occurred to me that I couldn’t possibly do a good job of underwriting an overabundance of renewals at one time. I decided to ask my agents if they and the insured wouldn’t mind moving the renewal date. Amazingly, most all the insureds had no issues with moving their dates to a less hectic time, and the agents were relieved to spread their workload out a little bit.
For most lines of business, inception dates are completely random. Certainly schools seem to cluster around the 7/1 date because that’s when their fiscal year starts, and they want their coverage to coincide with their year.
Back in the day, D&O used to incept along with the fiscal year start, but think about this — the most recent year end financials are one of the most critical underwriting elements. When are they ready? Certainly not two or three weeks prior to year end. They are ready two months after. So why not have your D&O inception be three months after year-end? That way, the most recent financial information is easily provided to the underwriter in time for renewal. And…if your year-end is 12/31, the farther away from that date you are, the less likely everyone will be tied up with vacations.
And speaking of vacations, I had a large, complex risk that used to be a 1/9 renewal. The only thing worse than a 1/1 or 7/1 is a risk that renews the following week. Underwriters don’t pay attention to it because it’s not a 1/1, but once 1/1 comes, it’s a holiday, and next thing you know, they’re looking at the risk for the first time on 1/4 with no ability to properly review. And, the insured’s contact people were frequently on vacation. So, we moved the inception date to 4/9 and have been much happier with the results and more effective in the management of the account.
Just food for thought about how to avoid the bulge in the snake’s belly. Think about asking your insureds (or your agents) to consider moving an inception date so you can create a good balance of risks throughout various times of the year.
Tags: account management, D&O, inception date, renewal, underwrite, vacations
