“A really challenging space,” is how Barrack Broking director and business insurance broker Charles Gow-Gates (pictured) describes the world of alpine property when it comes to insurance coverage. That, however, has not stopped the young Sydney-based brokerage from recently arranging group insurance for 70 ski lodges in New South Wales and Victoria.
In an interview with Insurance Business, Gow-Gates painted a picture of how it assisted SLOPES (Ski Lodges Organisation of Perisher Smiggins and Guthega) in insuring 63 clubs that operate lodges in Kosciuszko National Park and the Victorian Alps. Citing the “huge shortage” in capacity, the Barrack Broking director highlighted the importance of zeroing in on the risk.
But, first, it helps to understand why alpine property is currently a particularly hard sector.
“It’s driven largely by the change in appetite, but then also the greater exposure to catastrophe losses and changing climate and weather events, and insurers being concerned,” explained Gow-Gates, who specialises in hard-to-place risks. “There were two large schemes for the alpine sector, and the insurers on those schemes came off risk about two years ago.
“So at that point there were hundreds of insureds in those areas who no longer had a relationship with their existing insurer and needed to find new insurers. There was already, at that point a couple of years ago, a massive shortage of capacity and over-demand. And then the hardening market has made that worse.”
According to Gow-Gates, “so many” insurance brokers in Sydney found themselves looking for new capacity when the schemes changed. He lamented: “You approach an insurer about ski lodges and they’ve seen it 1,000 times before; it’s been reviewed by the chief underwriting officer and they’ve made the decision at group level just not to participate.”
For him, that was half the challenge – that, in his view, insurers weren’t necessarily looking at the ‘merits’ of the risk but it was more of a blanket choice not to participate in the alpine regions.
“A focus on the risk has really been the key for us to be able to help get insurers to understand the risk and get comfortable with it,” Gow-Gates told Insurance Business. Moreover, he believes that what insurers want to see are insureds who are being proactive in managing the risk.
“The SLOPES programme is different in that they’re a very well run organisation,” noted Gow-Gates. “So they work collectively. The communication and leadership that comes from SLOPES is exceptional. And insurers ultimately had confidence in that. The fact that they work together as a group really helped.”
He added that government agencies, national parks, operators, chambers of commerce, and other alpine sector stakeholders are also coming together and are looking at risk at a macro level, resulting in significant changes to how risk is approached and managed.
“I’m hoping that that message will reach insurers and they’ll start to review their decisions and start to deploy a bit of capacity for these regions,” said the Barrack Broking director.
As for the role of the business insurance broker, he stated: “I think what we can do best as brokers is to help our clients to be able to demonstrate that they take risks seriously and they’re managing the risk and they’re invested in the risk. And it’s also key, especially in this market, that we have strong relationships with our existing insurers.”
“We found that with COVID and a hard market, clients really value advice,” asserted Gow-Gates, “and it’s not possible to get a better outcome by doing the same thing and approaching a programme in the same way. So definitely our focus is to think outside the square and look at how we can approach the market in a way that accesses the available capacity in the best way.
“That may be changing the structure of the programme, or changing how the risk is managed and communicated. Whatever it is, we find that clients are really seeking and valuing advice. So that’s our focus, is to work with those clients that might have complex insurance arrangements that need advice.”
Originally featured on Insurance Business Australia