COMMERCIAL PROPERTY & CASUALTY
Controlling What You Can Control
Navigating Today’s Property Insurance Market
The property insurance landscape is a constant topic of conversation – what’s happening in the local and national markets? How does it impact financials? What steps can you take to manage your risks?
The insurance landscape has changed dramatically over the last several years, so it’s more important than ever to stay informed and be proactive.
The Current Market Pulse
Recent observations suggest that the property market is trending in a more moderate direction. However, no one can truly predict where the market will end up. Rate increases, a familiar theme in recent times, are expected to continue. The silver lining, however, is that they will hopefully be more balanced, marking a slight retreat from the steep climbs we’ve seen recently.
However, not all geographic locations are feeling this shift, and regions prone to catastrophic events will likely continue with more stout renewals. These areas illustrate the stark reality that while the market may be leveling out on a broad scale, specific exposures in certain geographies will continue to impact insurance costs.
Compounding these factors is the lag effect of previous years' inflation-related increases. Carriers are still meticulously adjusting valuations to reflect the true replacement cost of properties today, a move that underscores ongoing industry-wide efforts to keep pace with economic realities.
"In light of these market dynamics, submission quality is especially pertinent. A well-prepared submission can significantly expedite the underwriting process, possibly saving you time, money, and the headaches that can accompany lengthy renewal processes."
Morgan Mahoney
A Bright Spot: Capacity and Competition
One key factor that might spell relief for the market is the gradual increase in capacity.
As reinsurance markets find their footing and more carriers enter the market, a more competitive environment is taking shape. This competition is a welcome change, potentially leading to more favorable terms and conditions for insureds.
The Critical Importance of Submission Quality
In light of these market dynamics, submission quality is especially pertinent in the context of acquisitions. The clarity, accuracy, and completeness of loss runs from sellers amidst acquisitions and underwriting data are more crucial than ever. A well-prepared submission can significantly expedite the underwriting process, possibly saving you time, money, and the headaches that can accompany lengthy renewal processes.
Winning Strategies: Sophisticated Program Design
Program design is paramount in today’s market. Tailoring coverage through standalone policies, coupled with strategic negotiations with lenders, can yield substantial benefits. This approach not only addresses specific risk profiles more effectively but also opens doors to potentially more favorable terms.
There’s also an innovative solution that can strengthen your program’s effectiveness: parametric insurance.
Parametric insurance stands apart from traditional insurance policies by offering objective, index-based solutions that provide payouts based on the measurable probability and severity of a specific event occurring. This model pivots away from the conventional indemnifiable loss coverage, opting instead for a predetermined payout triggered by the occurrence of defined parameters, such as hailstone size, wind speed, or the extent of a wildfire's damage. In addition to its customizable nature, parametric policies pay losses very quickly and provide the insured with maximum flexibility without exclusions or sublimits.
The property insurance market, with its inherent complexities and external pressures, demands a proactive and informed approach – and that’s where we come in.
Reach out to me at morgan.mahoney@thinkccig.com to develop a strategic roadmap to manage your risks.