Insurance Market Update
Owner/Operator Business Education
On The Changing Insurance Landscape
Insurance Market Update
Owner/Operator Business Education
On The Changing Insurance Landscape
PURPOSE
This website serves as a centralized hub offering real-time information to facilitate planning for insurance in the unprecedented times ahead, specifically for 2024 and beyond. It is consistently updated, sometimes even on a daily basis.
Current Insurance Events
US Owner/Operator Risk Management and Insurance
LATEST NEWS - INSURANCE MARKET
Illinois Property Insurance Rates up 30% - 18 September 2023
Hurricane Lee set to be a Record Cat 5 Storm - 08 September 2023
National Property Insurance Crisis Sparks Senate Hearing - 08 September 2023
Hurricane Idalia hits Florida as Cat 4 Storm - 30 August 2023
Tropical Storm Idalia forms - State of Emergency in most of Florida - 27 August 2023
California hit by first tropical storm in 84 years - 17 August 2023
Hawaii wildfire sets deadly record - 13 August 2023
Severe thunderstorms account for 70% of Catastrophic Losses - 10 August 2023
FL Governor unprecedented skyrocketing insurance premiums and cancellations - 17 July 2023
US Heat Waves Continuing Across Country - 09 July 2023
Nationwide also takes action to pull back in California - 20 June 2023
AIG & Farmers also reported to pull-back from some catastrophe risks - 9 June 2023
Allstate stops issuing new policies in California - 6 June 2023
Property Catastrophe Rates up 33% on June 1 Renewals - 1 June 2023
Hard market (rising premium) 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
FEMA Releases New Flood Insurance Rates by Zip Code, Brace For Impact - 22 May 2023
D&O Prices Plummeting - Record Low Level - 22 May 2023
Higher Property Rates are here to stay, no wishful thinking - 1 May 2023
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
Supply Change and Labor Shortages
- it takes longer to rebuild and open after events increasing losses
Climate
- climate changes have created a new normal of higher cost events
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
Inflation
- demand is up for much and a leading cause in this cycle
- property values have increased and most claim values have increased too
- social inflation has also added to costs
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 Property Insurance Rate Trends
US Weather Events and Data Tools
- Ian (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
Diversity Group Support - WON, NBMOA, MHOA, AMOA, etc.
- If you are members, you might value your agents attendance and support
"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
Prior Year Timelines
The current years timelines can be fluid depending on Corp. and NOIT. However, you can leverage the past years to set expectations and plan accordingly.
2024 Annual Insurance Timeline (in-process)
Approved Broker
Begin Working on the 2024 Renewal
- 4/1/2023 thru 2/1/2024
Partner With Clients and Support System Throughout the Year
Corp. Approval Process (Property/General Liability Only)
- Required Corp. Meetings with All Brokers (Late-October)
- Corp. Provides New Broker and Insurer Agreements (??)
- 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
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
IN THE BUSINESS OF HELPING OTHERS
The world is changing and we are here to help you.
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.
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