The current property and casualty insurance market is characterized by increased pricing, diminished capacity, higher deductibles and retentions, and unfavorable coverage terms, which can create significant challenges for individuals and organizations alike who turn to insurance for the critical financial protection it provides.
So, what are the factors driving these unfavorable conditions?
Natural disasters are growing in severity and frequency, replacement costs continue to trend upward, and more people are now living in harm’s way — these factors all increase carrier losses. And much like the property market, casualty lines are not faring much better. Cyber breaches only seem to get worse every year, with costlier losses for carriers. Social inflation, a trend in which insurance claims costs rise as a result of increased litigation, plaintiff-friendly legal decisions, broader contract interpretation, and larger jury awards, continues to strain the cost of casualty lines for individuals and businesses alike.
For businesses, the employee benefits space has presented its own challenges. With employees wanting to work for organizations that offer work-life balance, competitive salaries, and increasing demand for holistic benefits, companies are struggling to meet these expectations in the face of ballooning operational costs during a time of economic uncertainty. The rising cost of care and prescriptions also increases the cost of employee benefits.
The bottom line—premiums have skyrocketed. However, forgoing insurance coverage is rarely an option. On the commercial side, significant uninsured losses may force companies to curtail their operations or even close, while in the private risk space, individuals run the risk of losing a significant amount of their wealth. Insurance can prevent these outcomes from becoming a reality.
Because of market conditions, your loss history and evidence of loss control strategies matter more in today’s underwriting process. When your broker truly understands the ins and outs of your business, or understands the totality of your lifestyle, they can help you build a resilient risk management program that decreases the likelihood of a loss. Your broker can then help you create a narrative of your risk that highlights the proactive measures you take to prevent claims from happening so that carriers underwrite your risk with greater confidence and provide more favorable terms for coverage. This ultimately results in improved insurance costs and better, tailored coverage.
In today’s world, saving money and time is crucial. Working one-on-one with a singular experienced broker instead of several is more efficient, saving insureds valuable time. Gathering all insurance brokers from various firms together who manage multiple policies—not to mention other financial professionals, like lawyers, or trust officers—may waste time and decrease visibility into changes and conflicts that impact insurance coverage needs. One broker can manage all policies and minimize duplication, errors, and expenses and ensure that you are not over or under insured.
Though a challenging insurance market and economy highlight the importance of working with the right broker, the value add of your broker relationship has benefits that are valuable at any given time. The BKS Guide to Selecting and Working with a Broker helps you choose the best professional who will make a measurable, long-term difference for you or your business.
Click here to read the full BKS Guide to Selecting a Broker.