Last week, Insurance Business published an interview with Jennifer Steger, senior account manager with the insurance brokerage Trade Risk. Brisbane-based Steger and the firm’s managing director Shane Moore (pictured above), reached out to IB after one of their clients, a plumber, made a costly claim and then had his insurance renewal rejected.
The Brisbane brokers wanted to draw attention to what they see as an unfair denial of coverage.
Despite the plumber’s new risk management efforts and willingness to pay a high excess, Trade Risk was unable to find an insurer willing to provide coverage. Uninsured, the plumber faces the prospect of going out of business.
Some brokers responded to the story on LinkedIn.
“You should be commended for caring for the welfare of your client in this way,” said one comment directed at Steger and Moore.
“I too believe that insurers have a broader obligation to support commerce, trade and the community,” said another broker.
Apart from the difficulty the industry sometimes has balancing the needs of customers with making profits, Steger pointed to another issue connected to the plumber’s tale. She wants to see insurers provide more evidence when they refuse insurance, especially for renewals.
“I’d also like to see what evidence the insurers have to show why, after one big significant claim, that a risk is uninsurable,” she said. “Do they have examples where a major loss like this has happened and then more have followed? I don’t believe that’s what usually happens.”
Steger said, in her experience, a business that makes risk management mistakes, learns lessons.
“They don’t have that same loss again,” she said.
Another possible irony and industry lesson in the plumber’s tale: the renewal was turned down despite the firm taking steps to risk manage and prevent another accident – steps all insurers are encouraging customers to take.
“I’d like to think that they actually value the clients’ [risk management] measures, the lessons they’ve learned and see that this is [now] a better risk,” Steger said.
Moore also expressed his disappointment with the insurers’ response to his client on LinkedIn.
“It’s madness that our multi-billion-dollar insurance market can’t find a home for just one small plumbing business, and the irony is that this business is probably now a much better risk, having learned a major lesson and changed their procedures accordingly,” he said.
Moore said this is the first time in the 13-year life of his firm that his brokerage has been unable to secure renewal terms for an existing client.
“I’m coming from the human side of it in terms of the people who make these decisions within the insurers and big underwriters who need to understand the impacts of just saying ‘no’,” said Moore.
He said this impact includes businesses potentially having to close and lay off staff.
“Because insurers and underwriters are not, perhaps, as understanding as they could be,” said Moore.
There’s also the impact on the brokers who work with these businesses.
“I was able to witness first-hand the impact on Jen [Jennifer Steger],” he said. “It wasn’t just, ‘Oh, well, too bad, I couldn’t get them cover,’ and move on to the next thing.”
Moore said decisions to turn down insurance coverage can have “real emotional impacts on both the client and on the broker.”
The claim that led to the non-renewal concerned an installation job at a shopping centre.
“They [the plumber] had installed a fitting which did not handle the amount of pressure that ended up going through it and as a result the fitting came off and water went into a number of retail stores, including a bank,” said Steger.
However, the broker said when the accident happened, her client “immediately” acted to limit the damage.
The total damage bill so far, she said, sits at just over $100,000.
“That claim size could have been a lot larger than it was,” she said.
The insurance company, said Steger, has set a reserve at about $250,000.
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