The Client: A large New Zealand property business
The Situation: The business faced continually increasing premiums that far exceeded the rise in asset values
The Approach: Lockton partnered closely with the client to establish their own insurance company and develop a strategic reinsurance broking approach
The Outcome: The client achieved substantial savings compared to the initial estimates provided by the lead insurer
Situation
A large property business with a national portfolio, including significant values in high seismic risk zones, faced continually increasing premiums that far exceeded the rise in asset values. As their portfolio expanded, they encountered capacity challenges and perceived limited options.
Solution
Lockton partnered closely with the client to establish their own insurance company and develop a strategic reinsurance broking approach. This initiative was supported by comprehensive catastrophe modelling and refreshed risk engineering at key locations, facilitated by Lockton and independent specialists. Lockton also collaborated with the client to craft a customised submission and presentation. Well in advance of renewal, the client participated in insurance market presentations, guided by Lockton. During these events, they presented their risk profile to numerous insurance and reinsurance underwriters, highlighting the strength of their business.
Outcome
The Material Damage & Business Interruption programme received overwhelming interest, securing over 175% of the capacity initially required. This enabled the client to negotiate favourable premium rates and terms with insurers, resulting in substantial savings compared to the initial estimates provided by the lead insurer. In addition to these direct savings, the client benefited from ceding commissions from reinsurers, which fully offset the one-time costs of establishing the captive and ongoing administrative expenses.
The contents of this publication are provided for general information only. Lockton arranges the insurance and is not the insurer. While the content contributors have taken reasonable care in compiling the information presented, we do not warrant that the information is correct. It is not intended to be interpreted as advice on which you should rely and may not necessarily be suitable for you. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication.