What We’re Seeing Locally
We’re still in a hard market, but we’re seeing reasons to be optimistic as we progress through 2024.
While we’re still seeing premium increases, they seem to be smaller percentages than last year. So far in 2024, we are seeing 15-30% increases versus last year’s 30-150% increases. Increases for habitational buildings are varying depending on the build’s age and structure.
Stabilization trends in the economy and supply chain, and hopefully fewer major weather-related events in the year ahead will all help to stabilize the insurance market.
Trends Affecting the Wider Industry
Inflation Issues – Most lines of coverage have been impacted by inflation issues in recent years, prompting higher premiums and claim expenses when losses occur. Although increased material costs and wage growth trends have certainly softened since their peak in 2021, they continue to exceed pre-COVID-19-pandemic levels, affecting property repair and replacement expenses and related claims.
Natural Disasters – 2023 marks the fourth consecutive year in which global insured losses resulting from natural disasters are projected to exceed $100 billion. In addition, convective storms (e.g., thunderstorms, tornadoes and hailstorms) surged this past year, contributing to 68% of all weather-related losses in the first half of 2023. Many climate experts predict natural disaster trends will continue to exacerbate commercial property losses in the future.
Insurance-to-value (ITV) considerations – Insurance experts are encouraging businesses to be more diligent in performing correct ITV calculations and maintaining ample commercial property coverage. An accurate ITV calculation represents as close to an equal ratio as possible between the amount of insurance a business obtains and the estimated value of its commercial building or structure.
Reinsurance Capacity Challenges – As natural disasters become more severe and inflation sits at elevated levels, commercial property reinsurers are facing a rise in claims and diminished profitability. Consequently, some reinsurers have lowered capacity for catastrophe (CAT) exposures and hiked up primary insurers’ premiums. Certain reinsurers have also introduced sublimits and revised their policy wording to establish more distinct coverage restrictions. Reinsurance capacity will likely become further constrained in 2024,
impacting overall commercial property insurance limitations and costs.
What You Can Do Today
Continue risk management and maintenance, controlling the aspects you can control. Plan for an Increase. And remind owners to remain vigilant by:
- turning off water
- maintaining heat
- cleaning dryer vents
- changing smoke detector batteries
- cleaning HVAC condensate lines
- replacing hot water heaters
- checking ice maker and washing machine hose lines
Contact the coastal insurance experts at Deeley Insurance Group for more risk management tips to share with owners. Call 410.213.5600 today.
