As the economy seems to be heading in a positive direction, one particular contractor experienced abnormal revenue growth of 80% over last year. The increase in work brings a higher potential for losses, increasing vehicle and equipment inventory, and the company’s desire to grow their operations in the sector that has proven to be most profitable to them. As Beacon Hill looked at their upcoming renewal at least 30-45 days before expiration, we certainly noticed all of these changes. Twenty-two midterm endorsements had been issued midterm, for vehicle changes alone. Three new claims had been reported within the previous 6 months and we saw a huge shift in their operations. A company who had historically classified themselves as an Environmental Contractor performing mostly industrial cleaning services now contributed more than 75% of their operations to waste water disposal.
Because of an early renewal submission and discussion with the incumbent carrier, we were able to notify the agent that we would be facing some changes in the renewal terms. Because of the claim activity, we would not be seeing a substantial decrease in the rate, but more of a flat rate when compared to the expiring premium and revenue projections. Because of the operations, the incumbent carrier would only be able to offer the same limits as expiring on the GL/CPL/Professional and Follow-Form Excess policies ($5M) and would not be able to increase these limits at a later time if needed. Due to underwriting guidelines, we also had to remove the Auto policy from the Excess and increase the liability limits on the Auto policy to $5M in order to comply with contract requirements.
While these changes were understood and accepted, the insured had concerns about the carrier’s inability to offer higher limits. The incumbent carrier had offered their maximum amount of limits for this particular insured; however, we were able to approach a separate market who agreed to offer a second Follow-Form Excess policy in the event that the insured needed or wanted limits of liability higher than $5M. We also worked with the incumbent carrier to make the Auto policy composite rated; with so many changes in their schedule over the past 12 months, there was a large amount of work being done by the carrier, agent, insured, and Beacon Hill to maintain all processed endorsements and the return or additional premiums. A composite rated policy will allow the agent and insured to simply keep track of their changes and then adjust the premium at the end of the year with an annual audit. With this option on the table, the insured felt comfortable that the extra coverage was available through us and ultimately decided to renew coverage with the same carrier of 4 years.
Our agent presented an option to the insured from another market in the event that we were not able to provide the desired limit amount. This was $18,000 less than our terms, but the insured made the decision to stay with the incumbent carrier because of the relationship between all parties involved, the favorable claim service they had experienced over the past year, and the value in maintaining coverage with the same carrier for more than just a year or two. Beginning the renewal process early and maintaining contact with the agent and underwriter allowed us to recognize the potential issues early and provide a solution suitable to everyone involved.