Challenges still exist for social housing insurance

It’s November and already many housing associations are thinking ahead and looking for quotes from the 1 April. Although this is great to see, the best part is that smaller housing associations are also taking a more proactive approach.

The insurance market for social housing is still in turmoil, with more insurers exiting the market. Frequent catastrophic weather conditions are causing large flood and storm claims, dry summers and wet winters are increasing subsidence losses, and there has been an increase in fire claims. This has led to poor underwriting results.

Whilst inflation has reduced in the past year, interest rates remain high, so insurers can make more money investing their capital. Until interest rates fall significantly, insurers will avoid sectors with unfavourable results, such as social housing.

Despite all this there are some positive signs; the rate increases of past years have subsided and rates are stabilising. Some new insurers are now considering the social housing sector, believing the current rates to be more sustainable. The challenge is they want to be selective with their underwriting.

To achieve the best outcome, consider these key areas.

Strategy

Start early, between four and six months ahead, longer if your portfolio contains high rise properties or has significant claims. Consider the options available to you. If you are going to tender, pre-engage with as many brokers who participate at this level as possible: understand their approach, the insurers they use. More quotes increase competition and will hopefully give you options.

If you are a smaller organisation that does not use the formal tender process, look to deal with brokers who have experience in the sector. On occasion we have seen ten brokers quoting, all of them covering every insurer. This puts insurers off because they realise that if they quote everyone, they are unlikely to win, so instead they decline and reduce competition in the marketplace. Instead talk to three or four brokers who have experience, understand which insurers they use, then be clear about who they can approach so you get as many quotes as possible.

Preparation

Detailed data increases your chances of success because it allows insurers to understand the risk and exposure. This includes:

• Full risk address, including postcode and sum insured per property.
• Number of storeys, construction, and year built.

For claims data, we would want to see:

• Date of loss, type of loss.
• Claim paid, claim outstanding.
• Excess deducted.

Ask yourself why your risk is worth the insurer considering. Think about what you do to manage the risk. Is your maintenance proactive or responsive? What have you done to control or reduce claims in recent years? With so many quotes in the market, you need to build a positive picture so insurers choose to provide terms to you.

Options

Be prepared to consider all options available to you to get the best results:

• Increasing excesses - your insurer/broker should be able to model the impact the excess has versus the premium saving.
• Change your renewal if it’s one of the quarter dates by seeking an extension from your insurer. Quarter dates are exceptionally busy for insurers and they’ll become increasingly selective about which new risks to quote for.

Focus on making your risk look as good as it possibly can. Understand your portfolio and claims record. Work with your advisers to demonstrate why your risk is better than others; emphasise the positives and demonstrate your plans to mitigate the negatives.