Most business owners that have significant property values are either dealing with soaring property premiums or will likely be faced with this reality in the near term.
Here are some examples of what is driving the rate increases and how your business can prepare for them.
Historically, property insurance has been an area often overlooked when business owners review and consider their insurance needs.
The reason for this is fairly straightforward: rates are very low in the areas of our country that aren’t usually affected by annual weather events like our coastal areas, wildfire prone areas and wind belt areas of the country.
Unfortunately, a majority of the remaining states are starting to deal with the reality of higher property rates due to changing weather, including an upsurge of wind and hail events in the Rocky Mountain region, increased flooding in non-traditional flood prone areas and ice storms (to name a few).
The short answer is this:
- Carriers are underwriting property much more conservatively
- Capacity for the property exposure in each state is becoming more difficult for the risk bearing partners (carriers) to adequately provide for their customer base
- Treaties for the excess property exposure have increased dramatically for the remaining risk
- Wholesale and surplus lines markets are being brought in on situations where previously they weren’t even a consideration due to the price point of the product that’s available
In addition to weather related events, other areas that the consumer doesn’t associate as property” are impacting rates such as:
- Business income and extra expense
- Foodborne illness and tradename restoration (a business income coverage)
- Pollution clean-up
- Building ordinance
When we consider all of this along with claim and the return on shareholder investment, it’s no wonder that property rates will be increasing in a dramatic way for the near term.
How can you prepare and offset some of this?
- Take on more deductible (retention) as the consumer
- Consider blanketing your limits
- Take a very hard look at your values and ensure that they represent the true exposure you have in the event of a loss
- Consider capping your exposure
Of course all of this assumes there’s a strong relationship between a client, their insurance agent and the carrier partner to evaluate, and determine what the best course of action is to control risk while not leaving yourself vulnerable in the process.
It’s why we work closely with our clients and prospective clients everyday to evaluate the nature of their risk, their appetite to retain risk, and the costs associated with the choices they choose.
We’re happy to assist you in reviewing your program of coverage to see what options and leveraging we can provide to help you control your costs in the volatile market we’re in. If you have questions, don’t hesitate to contact me.