For the last several years, it’s been a buyer’s market in Commercial Property insurance. Premiums were low, carriers made strides with innovation, and everybody was happy. Then we saw several catastrophic events: Hurricanes Harvey, Irma and Maria; two major earthquakes in Mexico; wildfires in the Pacific U.S.; and significant hailstorms and flooding. Buckle up…it’s going to get a little rough on the Property Insurance journey.
According to a recent report by CRC Group, in the relatively calm era between significant catastrophes (Hurricane Wilma in 2005 and Hurricane Harvey in 2017) capital was flowing freely in the reinsurance market. Now, with a slew of large losses to cover, Commercial Property insurance carriers will need to tap into their reinsurance, which will inherently result in higher reinsurance prices going forward. This is one factor that will result in decreased capacity (i.e. ability of the insurance carriers to take on risk.) Decreased capacity equates not only to increased price…it’s the law of supply and demand…but also to much tougher underwriting.
What does this mean for you, the Commercial Insurance client of The Gaudreau Group? Luckily, our firm has access to a wide range of insurance markets, resulting in more options for our clients. We also work with our clients on a very strategic, proactive basis to insulate you as much as possible from dramatic increases. How do we do that? We start early with the carriers, and we build compelling narratives about your company to help the underwriters feel comfortable about your operations.
While almost everyone is likely to feel the effects of the hardening market, our clients are well-positioned to weather this storm most favorably.