Case Study - Premium Negotiation
Problem
A major hotel chain had experienced consecutive years of large property losses, in aggregate. As a result, the client’s insurer was threatening to reduce the coverage provided and increase the price of the reduced coverage.
RCS Action
RCS’s team members helped perform an analysis of expected losses in the prospective year, for use in the client’s negotiations with the carrier. With the carrier’s actuary selecting a loss estimate that was $6M higher than the results of our analysis, RCS team members requested a call with the carrier’s actuary to discuss the difference in results.
Outcome
RCS team members helped reveal that the carrier did not account for a 25% decrease in TIV when projecting losses. As a result of this call, the client was able to secure 50% more coverage than they otherwise would have obtained. Moreover, the loss pick served as a funding estimate for the client’s captive in the upcoming year, enabling it to achieve risk transfer and qualify for insurance tax accounting.