Insurance Market Updates
Owner/Operator Business Education
On The Changing Insurance Landscape
Insurance Market Updates
Owner/Operator Business Education
On The Changing Insurance Landscape
PURPOSE
Overview
The purpose of this web site is for the system to have one location with information to help them plan for 2024 and beyond related to insurance in an unprecedented time period. We started this web site in September of 2022 and often update it daily.
Current Events
We Need Your Help
If you have additional questions, please contact your Dedicated Client Manager with that feedback or information so we can update this web site for the benefit of the entire system.
LATEST NEWS - INSURANCE MARKET
Property Catastrophe Rates up 33% on June 1 Renewals - 1 June 2023
Hard market conditions intensify in commercial property - 31 May 2023
State Farm decision highlights challenges in California's property market - 30 May 2023
NOAA Predicts Near-Normal 2023 Atlantic Hurricane Season - 23 May 2023
- El Nino, Above Average Atlantic Sea Temperatures
Insurers still wary on property catastrophe pricing - 24 Feb 2023
Property Insurance rates expected to jump another 40-50% in June - 17 Feb 2023
Turkey hit by M7.8 earthquake - 6 Feb 2023
US January Property Rates up 30%+, nearly 20 year high - 2 Feb 2023
Home Property Insurance Outlook - 1 Feb 2023
- 2023 expectations of 20%-200%+ increases
Renewals See Hardest Property-Catastrophe Insurance Rates in a Generation - 23 Jan 2023
Florida Homeowners Insurance Expected To Average 40% Increase - 19 Jan 2023
- we are personally hearing of non-renewals and 100% increases as a norm
Property insurance rates to keep surging in 2023 - 10 Jan 2023
Catastrophe exposed rates continuing to rise fast - 9 Jan 2023
Rates now 165% higher than 2017 lows - 4 Jan 2023
No ILS capital coming to the rescue - Steve Evans | 20 Dec 2022
Attachment doubling, US renewals close with holes - 20 Dec 2022
Florida Property Surplus Down 23%, Loss Ratio at 147% - Steve Evans | 12 Dec 2022
Hurricane Ian's influence will be felt by all - Steve Evans (Swiss Re) | 9 Dec 2022
50%+ rate rise for US Property Reinsurance - Steve Evans (Goldman Sachs) | 8 Dec 2022
Hard insurance market will spell end for many - Fiona Robertson | 6 Dec 2022
Inflation will make 1/1 reinsurance renewals challenging - Market Insight | 6 Dec 2022
Grim picture for January 1 property reinsurance renewals - Bethan Moorcraft | 30 Sept. 2022
Macro Impacts on Rising Premium
PROPERTY
Losses/Claims
- 5 years of losses in the insurance industry - even before Hurricane Ian
Global Catastrophes
- learn more here - last year was 76 percent above the 21st century average
- Hurricane Ian in 2022, even when adjusted for inflation, is forecasted to be 2+ times the cost of Hurricane Andrew
- Much more...Top 10 Here
Inflation
- property values have increased and most claim values have increased too
- social inflation has also added to costs
Supply Change and Labor Shortages
- it takes longer to rebuild and open after events increasing losses
Interest Rates
- capital/money leaving insurance and going to alternative places of higher yield
- premium finance rates follow interest rates which have nearly doubled this year
- US currency appreciation / exchange rates
Climate
- climate changes have created a new normal of higher cost events
Density
- areas continue to grow in density so when events happen, they cost more
LIABILITY
Judicial/Liability Hot Spots
- See States and Areas - click here
- Florida specific
Litigation/Attorney Fees
- Florida among other States
Nuclear Verdicts
- Learn more here (Florida California, New York, Texas, and More)
"Insurance Capacity"
- This is a very important term in the news as the availability of property insurance (especially after Jan. 1st) tightened dramatically due to multiple unprecedented events above happening in parallel.
- The “capacity” is indicated to be down by perhaps 50% in Coastal States and less in other States. Capacity is like availability. Meaning, if 50% of homes, gas, eggs, milk, etc. are not available, then people would either pay very high prices for what is available (supply/demand) OR they would go without these items. In insurance, those that can self-insure could consider choosing this option. For example, if you have a home with no loans, you could choose to not carry certain insurance. However, your restaurants require insurance and at certain coverage limits determined by others. As a result, you will fight for what insurance is in the market at a higher price.
- The way insurance companies will navigate this first is to simply non-renew policies most at risk for claims or that have had claims. After this, then they will determine higher pricing for remaining accounts knowing that some will then not renew due to cost.
- The current market conditions have not been seen since after 9/11 and in the 1980’s, but obviously we have much more to insure now than we did back then.
US Weather Events and Data Tools
- Ian in late 2022, even when adjusted for inflation, was 2 times the cost of Hurricane Andrew
Severe Storms/Tornado/Hail/etc.
- visualizing climate and weather datasets
Earthquakes
Frequently Asked Questions (FAQ)
The below activities always require an appropriate license. These activities include:
· comparing insurance products
· advising customers about their insurance needs or other insurance matters
· interpreting policies or coverages
· binding new, additional, or replacement coverage for new or existing customers
· binding coverage on or recording additional property under existing policies
· soliciting the sale of insurance by telephone, in person, or by other communication methods
The degree of Felony and penalty varies by the State in which the above happens.
The Property Insurance market had changed dramatically and impacted all US Owner/Operators renewal premiums. As an example, only 2 of the 5 property insurance options offered to you in 2022 will be back in the system in 2023.
Besides your claims/losses, premium are also driven by your Property Values and Sales. Even if rates were flat/same in a given year, if your Restaurants Building/Contents are worth more vs. last year and/or your Sales have risen, then you should expect that minimum % increase in your premium.
For example, lets' use your homeowners insurance as many understand this best. If
your homes value goes up 10% in a given year and thus you increased the value of
your home with your insurance company by 10%, your homeowners premium would
rise at least 10%.
Longevity of the broker and their respective insurance companies/markets is important. Leaving a long-term partner has left many over the years in tough positions. How long a Property insurance company has been supporting Owner/Operators is a great indicator of a programs abilities within the insurance marketplace and their long-term value to Owner/Operators. Remember, more than half of the brokers will be presenting a brand new insurance company/market this year.
Number of years that a Property insurer has been supporting O/O
- some have never paid a O/O claim, new to the system
"Aggregate" programs
- Most will have an annual aggregated/combined limit for Earthquake/Flood
- However, some also aggregate/combine Named Storm Wind (hurricane, tropical storms, etc.), Fires, Hail, and everyday Property Claims eating away at annual program limits available to those in the program. 2 hurricane occurrences, as an example, could quickly erode such insurance options.
- Some also share risk/claims with numerous insurance companies/markets while some have only 1 insurance company/market
Terrorism (excluding Umbrella/Excess) is only included with a couple of options
- Other options charge extra for base Terrorism causing some confusion when comparing options
Wind/Hail deductibles
- Not just Named Storm Wind, but rather these high deductibles apply in some programs to all Wind/Hail
Food Spoilage limits of coverage
Off-Premise Service (loss of power) limits of coverage - Business Interruption section
Availability of Optional Coverage Offerings
And Much More
Contact a Locally Licensed Approved Insurance Agent To Learn More
NOIT Glossary:
Click Here or visit https://noit.com/resources/glossary/
Other Terms:
ALS: Actual Loss Sustained
BI: Bodily Injury Read More
BI Coverage: Business Interruption Coverage Read More
BINDER: A legal agreement issued by either an agent or an insurer to provide temporary evidence of insurance until a policy can be issued. Read Full Definition
CAPACITY (insurance): The largest amount of insurance/reinsurance available from a given insurance company/market. Learn More
D&O: Directors and Officers
EPLI: Employment Practices Liability Insurance
EPRMA: Employment Practices Risk Management Association
FIP: Florida Insurance Program
GL: General Liability
Llyod's of London: Is a marketplace for insurance, not an insurance company per se. More than 80 “syndicates” and 50 managing agents underwrite at Lloyd’s. The primary competitive advantage over its closest competitors that Lloyd’s has had over the years has been its ability to pool capacity to insure large exposures. Lloyd’s has also traditionally been more innovative with respect to contract wording and has exhibited greater flexibility in insuring “problem” risks. Lloyd’s has benefited from the existence of a large and sophisticated brokerage community in London. It is also perceived by many in the business, as well as insureds, to be “user friendly”
NOIT: National Operators Insurance Team (see NOIT for roles/responsibilities)
ORMA: Owners Risk Management Association (see NOIT for roles/responsibilities)
PML: Probable Maximum Loss Read Full Definition
PUBLIC ADJUSTER: https://noit.com/resources/report-a-claim/#PublicAdjustersFAQ
TIV: Total Insured Value (which usually includes Building, Contents, and Business Interruption)
TLPG: Tort Litigation Practice Group
2023 Insurance Timeline (Past Year)
Owner/Operator
Loss Prevention Review
- mid-year reviews, making your business a lower risk
Review Claims/Losses (at least monthly)
- managing claims is important as those with the lowest claims, usually get the best rates
Plan/Budget for 2023
Submit Insurance Application
- 2/1 thru 2/21
Receives Insurance Proposal(s)
Reviews Proposal With Agent
Renews with Approved Broker
Approved Broker
Begin Working on the 2023 Renewal
- 4/1/2022 thru 2/1/2023
Partner With Clients Throughout the Year
Corp. Approval Process (Property/General Liability Only)
- Required Corp. Meetings (In-Person Chicago) with all Brokers and Insurers
- Corp. Provides New Broker and Insurer Agreements (Early-October) - 11/18
- Brokers Finalize Insurance Markets
- solutions must meet or exceed draft insurer agreement requirement
- Brokers Submit To Corp. Required Approval Items (Mid-October) - 12/2
- Corp. Approval of Broker/Insurers (Early-November) - 12/24 (est.)
- Execute/sign of all Annual Agreements (Mid-November) - 12/24 (est.)
- Brokers provided high-level email on the renewal (November) - 12/21
- national programs (Umbrella, EPLI/D&O, Cyber) rates up 58% per restaurant
- Brokers provided full renewal terms for: - 12/22
Umbrella, D&O, EPLI, Cyber, and Earthquake
- Brokers provide other required items to Corp. by January 1
Email Sent to all US Owner/Operators - 1/5
- Solicitation of Package and Workers Compensation Insurance Applications
Final Negotiation of Terms, Options, Other Coverages, and Premiums
Clients Updated On Renewal, Expectations, etc.
Update Internal Broker Systems
- Application Processing, Rate, Quote with the latest information, taxes, etc.
Send Insurance Proposals
- 2/15-2/17 Final Underwriting/Pricing Meetings with Markets
- revise/correct proposals as needed via direction of Owner/Operators
- continued premium negotiations with insurance markets/companies
Bind Coverages / Send Confirmations of Coverage to Owner/Operators
- O/O signing/binding ASAP
- ....before some worldwide event further disrupts the insurance market
3/1 Package Policy Effective Start Date
Collect Deposits/Premiums and Remaining Paperwork
Reconcile and Pay Premiums to Companies, Markets, Corp., etc.
Brokers Receive Commissions Due From National Programs <- System Is Here
Brokers Receive Policies <- System Is Here
Brokers Review Policies <- System Is Here
Brokers Sends Policies to Owner/Operators <- System Is Here
2024 Annual Insurance Timeline (TBD)
Owner/Operator
Loss Prevention Review
- mid-year reviews, making your business a lower risk
Reviews Claims/Losses (at least monthly)
- managing claims is important as those with the lowest claims, usually get the best rates
Plans/Budgets for 2024
Submits Insurance Application
- 2/1 thru 2/27
Receives Insurance Proposal(s)
Reviews Proposal With Agent
Renews with Approved Broker
Approved Broker
Begin Working on the 2024 Renewal
- 4/1/2023 thru 2/1/2024
Partner With Clients Throughout the Year
Corp. Approval Process (Property/General Liability Only)
- Required Corp. Meetings (Virtual Meeting This Year) with all Brokers and Insurers
- Corp. Provides New Broker and Insurer Agreements (Early-October)
- Brokers Finalize Insurance Markets
- solutions must meet or exceed draft insurer agreement requirement
- Brokers Submit To Corp. Required Approval Items (Mid-October)
- Corp. Approval of Broker/Insurers (Early-November)
- Execute/sign of all Annual Agreements (Mid-November)
- Brokers provided high-level email on the renewal (November)
- national programs (Umbrella, EPLI/D&O, Cyber) rates up XX% per restaurant
- Brokers provided full renewal terms for:
Umbrella, D&O, EPLI, Cyber, and Earthquake
- Brokers provide other required items to Corp. per 2024 contract
Email Sent to all US Owner/Operators
- Solicitation of Package and Workers Compensation Insurance Applications
Final Negotiation of Terms, Options, Other Coverages, and Premiums
Clients Updated On Renewal, Expectations, etc.
Update Internal Broker Systems
- Application Processing, Rate, Quote with the latest information, taxes, etc.
Send Insurance Proposals
- 2/15-2/17 Final Underwriting/Pricing Meetings with Markets
- revise/correct proposals as needed via direction of Owner/Operators
- continued premium negotiations with insurance markets/companies
Bind Coverages / Send Confirmations of Coverage to Owner/Operators
- O/O signing/binding ASAP
- ....before some worldwide event further disrupts the insurance market
3/1 Package Policy Effective Start Date
Collect Deposits/Premiums and Remaining Paperwork
Reconcile and Pay Premiums to Companies, Markets, Corp., etc.
Brokers Receive Policies
Brokers Review Policies
Brokers Sends Policies to Owner/Operators
IN THE BUSINESS OF HELPING OTHERS
The world is changing and we are here to help you with your upcoming insurance renewal(s).
Whether a client or not, we are here to help!
Please reach out no matter your situation or status - we will do our best to help you and your business.
Copyright © 2022 Besnard Insurance LLC and Dean Villella Agency - All Rights Reserved.
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