In the third year of a long-term insurance deal, a broker for a client with 45 power plants asked to change the terms. The broker said the insurance market was softer (less expensive) now. They wanted a 10% cut in the price and a 5% increase in their own pay. If the insurance company agreed without making other changes, they would lose about 15% on the deal.
Three insurance companies shared this plan:
The main insurer covered 50%.
A second insurer covered 20%.
The team looking at the broker's request covered 30%. This team could take on 40% if the deal was good.
Time was short, and other insurance companies were willing to meet the new terms. The broker said they would find a new insurer if needed (called remarketing).
The answer was to offer a deal with rules. The insurer would take a bigger share of the plan if the broker agreed to clear terms, higher deductibles, and service rules. This way, the client would feel they won, and the insurer could still make money.
Role A — Underwriter (Casualty)
Goals
Get a 40% share of the plan by taking over the 20% share from the second insurer.
Keep a good relationship with the main insurer and the broker.
Avoid setting a new standard for lower prices and higher pay that could hurt other deals.
Levers
Capacity: Offer to take a bigger share if the broker agrees to certain price limits and terms.
Deductibles: Change the deductibles (the amount the client pays before insurance starts) and other rules to protect against big or common losses.
Service Add-ons: Offer extra help, like engineering support or special claims handling.
Constraints/Guardrails
A lowest price for the insurance.
A highest limit for the broker's pay.
Any costs for ending the long-term deal.
Limits on the total risk across all the power plants.
