We see a number of trends coming from both the insurance company and our clients.
Insurance underwriters are asking more questions. We call this insurance ping pong. At renewal the insurance companies are asking very direct and specific questions about our client’s operation. Anything from verifying the 911 address of a rural location to requesting an updated Actual/Replacement Cash Value worksheet. The more information that a client provides, the clearer picture that the underwriters have and the more accurate (and cost effective) they can customize a quote for your operations.
It is important that clients respond immediately with accurate information. This information is passed on to the underwriter for review. If the underwriter is satisfied with the answers, a new business or renewal quote will follow. The underwriter may ask an additional question or two. Ping pong.
We see Commercial Property premiums rising 15% to 20%. This is due to several factors. Insurance companies have has a stretch of less profitable years because of an uptick in natural disasters. Insurance companies need to make money in order to stay solvent and pay out claims. What they are doing is spreading the pain onto backs of all Commercial Property insurance customers. This is the basis behind any insurance market or industry.
Picture boats in a harbor. if the tide rises or falls, all the boats will do likewise. It is the same with our clients, and any industry. If there are large catastrophes in a sector, then all of the companies will see a rise in premiums. If there are little to no losses over the course of time, premiums will decrease across the board.
We have seen this same cycle several times in the 30 years that our agency has insured power related projects.
Some clients are trying to save money of premiums by lowering their property values. This is a red flag for insurance companies. They know that property and replacement generally trend upward. When an insured cuts his values significantly, underwriters want
to know why. It is important to have a plausible reason for your new property values.
Fortunately Commercial General Liability rates are holding level.