The Hard Truth

The Hard Truth

When Mother Nature Strikes Your Insurance Carriers’ Bottom Line

2022 is yet another year that has been shaped by the destruction of natural disasters — what were once outlier weather events have become the new norm. To top that off, it’s been another year characterized by a challenging economic environment — high inflation, a historic supply chain crisis, labor issues, and the growing threat of a full-blown recession have affected businesses of all sizes and in all industries. So, where does this leave the insurance industry and commercial enterprises that rely on it for risk transfer?

Learn more in our upcoming webinar, “Making a Soft Landing in a Hard Market.”

By the Numbers

Add up insured losses for natural disasters so far in 2022, and they approach $115 billion.

Most recently, Hurricane Ian dominated headlines. Early estimates project that it will be a $53 billion to $74 billion insurance loss, which is sure to deal a blow to an already shaky commercial property insurance market also bearing the brunt of capital challenges brought on by the current economic environment.

In fact, insurers recorded $24.3 billion in net underwriting losses in the first 9 months of 2022 – nearly quadruple the losses from the same period in 2021.

Because of these pressures, property insurance carriers are taking a close look at how extreme weather events in high-risk areas are impacting their bottom line. Recent losses and unreliable historical data create layers of unpredictability that make carriers wary of providing coverage. Carriers only continue to become more calculated in their risk selection and pricing, which is why property lines of insurance have entered what’s called a hard market.

Meeting the Challenges of the Hard Market

In a nutshell, a hard market means that property insurance carriers are diminishing their appetite for risk, increasing the cost of premiums, and heightening underwriting scrutiny. Carriers may even choose to pull out of riskier markets all together. For businesses, this means fewer options for coverage at a higher cost while having to take on more risk.

You might be wondering what, if anything, can be done to meet the challenge of purchasing property insurance that meets your business needs in tandem with other growing operational costs. Though there is no silver bullet solution, there are things you can do to obtain more favorable results from underwriters so you get the coverage you need at the best available price.

Key steps include:

  • Reassess your risk tolerance
  • Confirm coverage requirements
  • Prepare a complete property program strategy

Complete these steps at the beginning of the renewal process to avoid claims nightmares and lead the process with underwriters.

Get Support From Your Insurance Partners

We’re bringing together the collective expertise, experience, and capabilities of our team and all the BRP Partners to deliver a series of resources to help our clients in the current property insurance market. These resources include an upcoming webinar with presentations by Sean Kevelighan, Insurance Information Institute President and Chief Executive Officer, and our senior leaders.

Webinar: Making a Soft Landing in a Hard Market

Date:  Jan. 23, 2023

Time: Noon – 12:45pm ET

Link to Register

Connect with us today to make sure you understand the hardened commercial property insurance market and learn more about what you can do to navigate it.

This material has been prepared for informational purposes only. BRP Group, Inc. and its affiliates, do not provide tax, legal or accounting advice. Please consult with your own tax, legal or accounting professionals before engaging in any transaction.

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This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The content of this document is made available on an “as is” basis, without warranty of any kind. Baldwin Risk Partners, LLC (“BRP”), its affiliates, and subsidiaries do not guarantee that this information is, or can be relied on for, compliance with any law or regulation, assurance against preventable losses, or freedom from legal liability. This publication is not intended to be legal, underwriting, or any other type of professional advice. BRP does not guarantee any particular outcome and makes no commitment to update any information herein or remove any items that are no longer accurate or complete. Furthermore, BRP does not assume any liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Persons requiring advice should always consult an independent adviser.

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