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contract being signedAs a business owner, insurance can be a frustrating necessity. It can be expensive, the application process is often intrusive, and there can be an uncertainty that you may not have gotten the right coverage after you purchase it. It’s not a process you want to go through every year.   Ideally, you find a carrier and an agent you trust and stick with them. Oftentimes, sticking with what you know is better, until you get a letter of Non-renewal informing you that your carrier has decided to drop you as a client.

Non-renewal letter can bring up a number of questions such as: What does it mean? How does it happen? What’s my next step? We have compiled a list of answers to the most common questions that arise from receiving a non-renewal notice from your carrier here.

Why Businesses Can be Dropped by their Insurance Carriers.

1. Claims- All carriers know they will have to play claims eventually and they are fine with that as it is part of their business. Sometimes, when a business has a certain of claim, they are no longer in alignment with their carrier’s appetite. Other times, a series of claims within a short time frame can lead to a company being non-renewed. It is important to note that these appetites and guidelines are constantly evolving and hyper-specific by the carrier. They will do their duty and defend the claim but don’t want to stick around for any other claims that could happen.

2. Risk out of an insurance company’s appetite - Carriers often like to write specific types of business or “risks” as they call it. These favorable lines of coverage are referred to as a carrier’s appetite. Sometimes a carrier doesn’t fully understand everything a company does and, once they do, they reconsider their coverage.  Sometimes it’s due to miscommunication between underwriters, agents, and the insured.  

3. The insurance company is pulling out of a market – There are instances where unfavorable market conditions lead a carrier to pull out of insuring a particular line of businesses or in an entire geographic region. It could be too costly to do business there from a regulatory standpoint or the claims are out of control.  For example, there are a number of carriers that stopped insuring certain home-related risks in the Gulf Coast area following Hurricane Katrina. 

Steps to take after getting a non-renewal notice:

1. Find out why it happened - Every other carrier will want to know why you were dropped from coverage before.  Do yourself a favor and discuss the reasons behind your non-renewal notice with your broker or with the carrier directly.

2. Get your loss runs - Loss runs are documents that give a snapshot of your company’s claim history.  Even if you’ve never had a claim, you’ll need them to shop for and obtain new insurance coverages after a non-renewal has been issued. Your agent or broker should be able to gather them for you.

3. Talk to your agent - Find out if they have a plan to get a replacement policy in place.  Do they have a lot of other clients in the same industry as you?  It helps them know the market for your industry. A good broker will work with you to identify new carriers that might be a good fit and advise you on any changes you can make to your business that will help with carriers such as risk management assessments.

4. Expect changes - Hopefully, you had great insurance coverages through a carrier that you really liked. Following a Non-renewal notice, you might end up with a carrier that doesn’t offer as robust of coverages or that you might not like as much.  They might charge extra for coverages that were included at no cost before.  If you are being dropped for claims, expect a higher premium.  Managing your expectations is a key part of finding coverage following a Non-renewal as it is no longer an apples to apples comparison.  Your company looks very different to insurance carriers after you’ve  been issued a notice, so be prepared to compromise

Just remember that having to switch insurance carriers as the result of a Non-renewal will probably be a frustrating process and you could be in for some short-term financial pain.  You’ll need to figure out why it happened and take steps to fix that in your company going forward.  If its claims based, it could be 3-5 years before the claims fall off your record and you can get back to a standard market that you’re more comfortable in dealing with.  A skilled insurance broker can help you navigate these uncertainties to help you obtain the best coverage possible.

If you are having trouble figuring out what's best for your specific situation, reach out to one of our experts by filling out the short form below!


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Alliance Insurance Group
7910 Ralston Rd., Ste 7
Arvada, CO 80002

Phone: (303) 279-9700
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