How to navigate a challenging insurance placement landscape to achieve better outcomes

While businesses in Asia can conduct risk finance optimisation to assess and select the right insurance program structure and procure parametric insurance to complement traditional property insurance, they may still encounter obstacles in completing their insurance placement due to challenges in accessing the required capacity.

Unlocking access to cost-efficient insurance capacity

With 450 highly proficient international placement specialists armed with extensive market network and deep risk knowledge, Marsh Asia’s placement team can help you access cost-efficient insurance capacity by leveraging our expertise in these areas:

Scale and network: The global scale of our specialised placement expertise and network gives us unrivalled leverage in the market to access international insurance capacity, helping bridge domestic capacity gaps and negotiating optimal terms and pricing for our clients. For instance, we launched Fast Track in 2023, an insurance facility that brings a substantial amount of “follow form” capacity globally across major lines of business.
Data and technology: The scale of our experience and knowledge has translated into a rich pool of data complemented by advanced technology platforms. Our benchmarking and analytics tools directly support our placement strategies.
Risk management focus: Our risk advisory expertise enables us to help clients strengthen and align their risk profiles to insurers’ underwriting requirements, giving insurers the confidence they need to extend capacity that would otherwise not be offered.
Insurer engagement: Our relationship with insurers’ decision-makers and understanding of their business needs and priorities allow us to mitigate underwriting restrictions for our clients.

How a trusted broker can help achieve positive placement outcomes

Businesses can consider several approaches to improve their insurability amid tough conditions, such as by improving risk profiles with a robust risk management strategy and taking the appropriate risk mitigation actions as recommended by trusted risk advisors. An adept placement broker can articulate these risk improvements to insurers and help them build underwriting confidence, as part of negotiations on the optimal program structure — including premium, deductible and limits — that can be extended to the business.

In doing so, businesses need to ensure that the broker they partner with has in-depth knowledge and experience on the risks particular to their industry, strong market relationships and understanding of insurer requirements, as well as a local presence that is supported by a global team of experts.

Taking the right actions to improve risk profile and achieve cost efficiency

Many businesses today have a coverage gap that require right-sized, value-optimised insurance solutions. The following case study demonstrates how Marsh Asia’s placement team provides the support that businesses need to attain favourable outcomes:

Case study #1: A power project with a US$2 billion coverage gap

A new entrant to the energy sector in Southeast Asia acquired a power project where the previous owner had placed more than 50% of the risk under their owned captive, leaving a substantial US$2 billion in capacity to fill after their divestment.

The project also did not have updated valuations and business interruption (BI) reviews for several years and was running behind on risk engineering improvements. Compounding these issues, the energy insurance market was experiencing significant losses, potentially driving up premiums despite the project having had no loss events.

Our risk consultants first helped to update the client’s insurance valuation and declared values, and provided risk engineering and crisis management support to improve their risk profile. Marsh Asia’s placement team further bolstered the client’s insurability by articulating the intricacies and benefits of their enhanced risk profile to prove commercial sustainability to insurers, and leveraged our extensive market relationships to negotiate and retain the same favourable terms and conditions enjoyed by the previous owner even though policy limits have now doubled.

With our placement experts’ robust support, the client managed to secure a two-year program with locked-in rates and a 3.5% premium discount^* compared to their previous program.

Securing bespoke coverage in exceptional circumstances

Aside from bridging coverage gaps and attaining cost-saving benefits, Marsh Asia’s placement team can also unlock much-needed capacity. The team’s in-depth knowledge into industry-specific risk exposures was instrumental in negotiating a bespoke Delay in Start Up (DSU) policy for a mining company, even though customised DSU coverage is typically unavailable in the market:

Case study #2: A mining company in Asia with expansion plans

A mining company was working with another broker to place a Delay in Start Up (DSU) insurance policy for an expanding facility which involved both doubling the size of existing processing facilities and constructing a captive combined cycle power plant. As the incumbent broker was unable to grasp the complexities of the project’s risk interdependencies and requirements, it was subsequently unable to design a cost-effective insurance program that meets the client’s requirements.

Turning to Marsh, our placement brokers drew upon our global technical expertise and conducted workshops to fully understand the project details and complexities. In just over two months, we were able to leverage our deep knowledge of reinsurer requirements and capabilities to negotiate with lead reinsurers to secure a tailored DSU structure with bespoke wording.

Although DSU structural and wording customisations are usually not easily accepted by co-insurers (especially in a challenging insurance market), our placement experts were able to complete the US$2 billion placement in just 10 days — three times faster than the typical 30 days — without amendments.

Addressing insurability issues with specialised expertise and insurer engagement.

As extreme weather events increase in frequency and severity, Marsh Asia’s placement team provides the strategy, solutions and expertise to unlock better outcomes ahead of property policy renewals, like this case study shows:

Case study #3: NatCat-exposed manufacturer with property policy renewal challenges

A manufacturer in Thailand was facing property policy renewal challenges due to their plants having high flooding and fire risk exposures, with one impacted by a fire a few years ago. Both the local and international insurance markets had limited appetite for these risks, and any capacity that was available came with a high premium, hence they turned to Marsh.

Five months prior to the policy renewal, Marsh Asia’s placement team organised workshops to provide the client with an overview of the market conditions and to collectively agree on a renewal strategy, which included a focus on risk management to strategically showcase the client’s investments and measures to improve their risk profile.

Concurrently, our placement team also met with reinsurers to better understand their renewal requirements. Due to the previous loss event, our placement brokers understood the necessity of demonstrating a proactive risk management approach and communicate tangible improvements to the insurer; Marsh Asia’s risk engineers helped in conducting surveys and gathering critical details to satisfy those underwriting requirements.

Ultimately, our placement experts helped restructure the insurance program with a blend of more cost-effective quota share capacity alongside non-proportional capacity, enabling a 15% premium discount^* compared to their previous program.

^*Individual placement outcomes depend on businesses’ risk profiles, insurance program structures, claims histories and risk improvements made.