Stress Test: Are You Asking the Right Questions at Renewal?

• November 11, 2026

By David R. Carothers

Most insurance programs look great on renewal day. The limits look right, the premium is competitive, the carrier is financially stable and the proposal is polished. Everybody shakes hands and moves on.

The problem? None of that tells you whether the program will actually work when something goes sideways—and that’s where most producers get it wrong.

They spend all of their time comparing coverage forms, negotiating pricing and discussing limits. Very few ever take the next step and ask the question that actually matters: “What happens if this thing blows up tomorrow?”

Because that’s what your client is really buying. They’re not buying a policy, they’re buying a financial strategy designed to protect the balance sheet when reality decides to show up.

If you’ve never stress-tested a program, you don’t know if it works. You’re guessing. And if you’re guessing, you’re no different than the agent down the street who’s leading every conversation with price.

This is one of the biggest differences between producers who write small accounts and producers who consistently win middle-market business. Average producers review policies; elite producers review outcomes. There’s a massive difference.

A policy review sounds like this: “Your umbrella is $5 million.” A stress test sounds like this: “What happens if your company vehicle causes a $12 million loss tomorrow?”

A policy review sounds like: “You have workers compensation coverage.” A stress test sounds like: “What happens to your experience modification factor if a catastrophic injury occurs next week?”

Business owners don’t lose sleep over insurance policies. They lose sleep over the impact that claims have on cash flow, profitability, growth and enterprise value. The producer who understands that wins.

Here are four common examples of how stress testing takes risk management to the next level:

Workers compensation. A contractor’s experience modification rate (EMR) is 0.82, their loss ratio looks good, their claims frequency is low and everything appears healthy. Then I ask the question: “What happens if one of your employees falls from a roof next month and never returns to work?” The room gets quiet, because now we’re talking about reality.

What happens to reserves? What happens to the experience mod? What happens to future premiums? What happens to profitability? What happens to project bidding competitiveness over the next three years? Those are the conversations that matter. Most producers stop at coverage. The best producers continue into consequences.

Commercial auto. This is another area where producers get lazy. I see it all the time. A company has a $1 million auto limit and a $2 million umbrella. Everyone assumes they’re protected. Why? Because that’s what they’ve always carried.

Then I ask another uncomfortable question: “What happens if one of your drivers kills three people tomorrow?” Suddenly the conversation changes. How quickly does the umbrella get exhausted? What happens if a nuclear verdict is involved? What happens if plaintiff attorneys pursue corporate assets? What happens to the owner’s personal guarantee obligations? What happens to the company’s reputation?

These aren’t scare tactics. These are legitimate business discussions, because bad things happen. Not every day. Not every year. But often enough that ignoring them isn’t a strategy.

Property. Here’s another area where stress testing creates value. The client is a manufacturer. They have property coverage, business income coverage and replacement cost valuation. Everything appears fine.

Then I ask: “What happens if a fire shuts you down for nine months?” Most owners immediately start talking about rebuilding. That’s not what concerns me. What concerns me is everything else.

Will key customers leave? Will employees stay? Can payroll continue? Can debt obligations be serviced? Has the business income worksheet been updated since revenues doubled? Have inflationary pressures changed reconstruction costs? Has anyone verified that the numbers still work? Many haven’t—not because they’re careless, but because nobody asked.

Umbrella. One of my favorite questions during a client meeting is simple: “Why is your umbrella limit what it is?” I can’t tell you how many times the answer sounds something like this: “That’s what we’ve always carried.” That’s a habit, not a strategy.

Maybe $5 million is enough. Maybe it isn’t. But there should be a reason. The limit should be connected to company assets, industry exposure, contractual requirements, risk tolerance, future growth plans and potential claim severity. Not tradition.

When a client realizes that they’ve never actually evaluated why they’re carrying a particular limit, we move into discussing risk instead of insurance.

Stress testing reveals problems that insurance alone cannot solve. Many of the weaknesses uncovered during stress testing have nothing to do with coverage. They’re operational.

The exercise reveals poor hiring practices, weak driver accountability, lack of return-to-work programs, inadequate safety training, poor claims reporting procedures, weak contractual risk transfer, inconsistent fleet management and deficient documentation.

None of those issues can be fixed with a policy endorsement. And that’s exactly why stress testing is so valuable. It forces clients to view risk through a wider lens.

Instead of asking, “Do we have insurance?” they start asking, “Why are we creating this exposure in the first place?” That’s a much more productive conversation.

The process for producers is simple. Start by identifying the largest threats facing the organization. Ask yourself: What event could materially damage this business? Then walk the client through the scenario: What happens? Who pays? How much is insured? How much is retained? What happens operationally? What happens financially? What happens reputationally? Where does the program hold up? Where does it fail?

The goal isn’t to create fear. The goal is to create clarity. The client should walk away with a better understanding of both their strengths and weaknesses. That’s what real risk management looks like.

The producers winning larger accounts today are not winning because they have better markets, lower pricing or prettier proposals. They’re winning because they ask better questions.

Stress testing is one of those questions. It changes the conversation from coverage to consequences. If you’ve never stress tested a program, you’re not managing risk. You’re guessing.

David R. Carothers is principal of Florida Risk Partners in Valrico, Florida, and owner of Killing Commercial.