In 2017, 15 separate weather and climate disasters each caused $1 billion in damages in the United States (Yes, at least $15 Billion in total). These events included 1 drought, 2 floods, 1 freeze event, 7 severe storms, 3 tropical cyclones and 1 wildfire. As we approach the New Year, the insurance industry braces for changes that may impact carriers and consumers alike. How will these changes impact you as a business-owner, property owner, or real estate owner?
1. REINSURANCE WILL BE MORE EXPENSIVE TO PURCHASE
Insurance companies carry insurance too. After they’ve submitted claims to their own carriers, they will suffer increases in premium from reinsurers. This means companies will be restructuring their programs and make significant changes that will affect the insurance market.
2. RATES WILL INCREASE
Due to the hefty losses incurred this year; insurers will be looking to replenish their funds. This will result in an increase in their product rates. According to a report by Willis Towers Watson P.L.C., commercial property insurance rates could increase by as much as 25% during 2018 for risks that suffered catastrophic losses this year. Those who did not suffer losses, but are in a catastrophe-prone area, can see rate increases between 10%-20%.
3. CHANGES IN UNDERWRITING
Carriers will be analyzing the data from their losses in order to make changes in their underwriting. What does this mean? Insurers may look to add more exclusions or policy limitations to their products in order to mitigate risk. It’s important to ask questions about your coverage and find out if any changes may have been made to your policy as a result.
The fact of the matter is: the insurance marketplace is going to react to these losses, and consumers need to be prepared. Now is the time to pull out your policies and speak to your broker 90 days prior to renewal to make sure you're ready for 2018.
Opinions expressed in this article are solely the author’s opinion, not intended to provide the reader with legal or any other professional advice. Should you need advice or opinion, consult with a qualified professional to address your specific needs.