Unless you’ve been living under a rock, you’ve likely seen (and are sick of) increases to your insurance whether it’s your personal or business insurance. The insurance industry, and the property market more specifically, is currently enduring its 5th consecutive year of a “Hard” market. When this Hard market began can differ based on who you talk to. Some use the “HIM” storms of 2017, Harvey – Irma – Maria, as a starting point, and others look at 2019 as the year the market really started to experience difficulties. Hard market conditions are created when insurance carriers are significantly impacted by underwriting losses and are forced to increase rates in order to remain profitable. These hard market cycles historically tend to last 2-3 years before new capital sees the opportunity to make money and enters the market, resulting in the softening of the market (a period when we see general flat or decreasing rates). What sets the current period apart are the global factors that have resulted in an unprecedented hard market not seen in the industry for 50+ years. Record inflation, the COVID-19 pandemic, civil unrest, increased natural disasters from climate change and increased coastal development, the war in Ukraine, and the developing issues in Israel, are just a few of the factors that have had a hand in the increase in rates you see in your premium today. These components have come together to create a “perfect storm” that has erased any allure of profitability for outside capital to enter the market and begin to turn the tide on the current market turmoil.
Since 2017, the US has seen 133 billion-dollar weather and climate related disasters, far outpacing the prior 10-year period (2006-2016) total of 116 weather and climate related disasters. These events paired with an even larger number of sub-billion dollar and non-weather events has had a significant impact on insurance carriers’ bottom line and has even crept into the reinsurance market that provides insurance to insurance companies. The result is a trickle-down effect of rate increases, an increased focus on replacement cost values, and overall underwriting scrutiny that has eroded capacity and limited underwriting appetite of insurance carriers. The unfortunate outlook particularly on property risks is more of the same for 2024, however, there is plenty you can do as an insured to put yourself in the best possible position to have a successful renewal.
Start early! The earlier you begin your renewal process, the more time you give yourself, your broker, and the carrier to gather data, evaluate risks, and negotiate terms and conditions. 90-120 days is a good rule of thumb to use, but mid-year stewardship meetings are also crucial to planning renewal strategy and setting expectations.
Data is Key. The famous saying in the insurance industry is “you pay for gray” meaning, if an underwriter is unsure of or doesn’t have a key piece of information, they will always assume the worst which will always result in higher rates and deductibles and restricted coverages. Maintaining key information about your business’ assets, exposures, and operations should be a continuous effort throughout the year as a best practice which will make life much easier come time for your renewal process to begin.
Get Creative. Simply relying on your broker to market your risk and deliver quote options is no longer enough to ensure a successful renewal. Be sure to ask your broker what alternatives are at your disposal. What other “tools” are in the toolbox to transfer or mitigate your risk?
Submissions Matter, Stories Matter More. Be sure your broker is compiling a thorough, complete, and clear submission for your risk. Underwriters are overwhelmed with submissions/quote requests these days and an incomplete or sloppy submission will get yours sent straight to the bottom of their pile. However, that alone is not enough - ask your broker to introduce you to the carriers they are engaging. No one can tell your story better than you, and being able to directly express to an underwriter what you are doing to mitigate risk and run a best-in-class organization can have an extraordinary impact on your renewal at the end of the day.
- Michael Zay
Property and Casualty Consultant
USI Insurance Services
ICO IS THANKFUL FOR HOUSTON HAVEN
Giving back to the community and being actively engaged in serving the communities where we live and work is something that ICO strongly believes in and supports. Houston Haven is a local non-profit organization that provides low-cost housing to out-of-town cancer patients and their families undergoing treatment at the Texas Medical Center in Houston, Texas.
Our ICO Team recently had the opportunity to attend Houston Haven's Fall luncheon to celebrate the many ways that Houston Haven has impacted and made a difference in the lives of those traveling from out of town for treatment at the Texas Medical Center.
As we listened and heard about Houston Haven's growth, success, and overall impact in the community, it was clear that it is the unwavering commitment and dedication of their volunteers that give of their time and resources that are the backbone of their success! It is their volunteers that have been their best advocates and support agents and they are what help Houston Haven to continue to fulfill their mission.
As we reflect this time of year on all that we have to be thankful for ICO is thankful for the opportunity we have to give back to others this Holiday season. We are reminded of the immense value and difference that our contributions can make and how our help can be a tremendous and essential resource for nonprofits like Houston Haven.
