Are we moving into a hard market? A soft market? Or is it a new kind of market all together?
These are the questions I am hearing from clients and others within the insurance arena. What we are experiencing in the insurance world is unlike anything we have seen before. No longer are insurance companies taking reactive measures to balance out the marketplace. In today’s world of real-time data and analytics, insurance carriers are using all of the tools they have to plan for the future.
What is impacting the insurance marketplace?
The insurance marketplace is being impacted by property insurance rate increases and rising reinsurance costs. This is due to several factors including increased cost of construction, increased cost of building materials, a shortage of skilled labor, and more and more severe catastrophic losses.
The combination of all of these factors has created the perfect storm in the insurance marketplace. Most customers have experienced years and years of reduced property rates as insurance carriers focused on a holistic approach to account underwriting. Carriers no longer rely on stale data to make underwriting decisions, now, carriers are using real-time data and analytics to forecast the future and ensure profitable underwriting for each line of insurance.
I think there are a couple of factors impacting the market place right now including the changes in underwriting strategies and risk appetite as well as the cost of reinsurance. Reinsurance rates are significantly higher overall and in some cases have doubled in the last six months. This is impacting the marketplace in a way that we have not seen in several years. Insurance carriers are in essence paying double for their coverage which then trickles down to the customers.
Avoid surprises and get to market early
This isn’t a marketplace that you want to be surprised by. Be prepared. There are unique strategies I can help you with to combat the increases that are expected. Check out our blog post on The Guide to Markets in Transition, and contact me directly for assistance.