JLT warns property investors on risk management

Jardine Lloyd Thompson Limited (JLT) warns this week that whilst some real estate investors have good insurance claims records because they manage their risks, others have just been lucky.

When insurance policies come up for renewal in the current climate, underwriters are looking for evidence of a risk strategy and not just luck.

John Searing, Head of Risk for Real Estate at JLT, says, “Unless a property company can show that it really does focus on risk management, it’s probably going to start paying more for its insurance. Underwriters want to see that the business has a strategy for preventing losses – that it knows how to do it, has systems and manuals, and gets reports and acts on them. If your claims record is poor, be prepared to get tough questions.

“When it comes to risks, it’s not just the big fire or flood that insurers are concerned about, though they certainly haven’t forgotten about them. They also want to know that attritional losses (meaning the more common, smaller events that erode the premium), are under control. Some of these, like malicious damage or maintenance related items, could well be on the upswing because of the economic climate”.

If the insurance market gets tougher, it may be possible to save money on premiums, because when competition is strong as it has been, underwriters will attempt to differentiate themselves, and they may give limits that the client didn’t even think they needed. A thorough review with your broker can probably highlight some areas which aren’t essential.

John Searing, concludes, “At the same time, cutting back on insurance means more losses can end up with the company, this means that risk management today is more important than ever – to control the cost of insurance and reduce the potential hit to the company’s own cash flow”.

Category: Home Insurance News, Insurance News, Jardine Lloyd Thompson News