HARD MARKET
A Hard Market
For Hard Times
Given the current economic
climate, the insurance
market has reached a
crossroads. After nearly 20
years of a soft—or buyerfriendly—insurance
market, we are
moving toward a hardening market—one
that is less friendly to insurance buyers.
While the effects of this hardening
insurance market on businesses will
depend on a variety of factors, many
businesses will see premium increases for
their insurance coverage overall. In fact,
for some types of coverage, businesses
may even see double-digit rate increases
at their next renewal.
Historically, the most common
contributors to a hardening market are
catastrophic (CAT) losses, inconsistent
underwriting profits, eroding investment
returns, economic conditions, and the
cost of reinsurance. However, 2020
has begun to present several emerging
developments that will also impact
pricing:
• Social inflation: Some of the
rising costs of insurance claims
are resulting from societal trends
toward increased litigation, broader
contract interpretations, plaintiff
friendly legal decisions, and larger
jury awards.
• Extreme weather events: Many
experts believe severe storms,
extreme temperatures, wildfires, and
flooding are the new norm. As these
catastrophes become more frequent,
the insurance industry and the
economy will likely struggle to keep
up with the losses.
• COVID-19: The full cost of
COVID-19 has yet to be determined.
However, if courts mandate
insurance carriers to cover
COVID-19 claims under certain
policies (which the policies were not
designed to cover), it could drive
insurers bankrupt.
Each of these key factors are crucial
in determining pricing, but situationspecific
factors also drive pricing like
loss history, the industry your business is
in, proactive measures taken to prevent
losses before they occur, and access to
competitive insurance markets. Overall,
pricing forecasts are anticipating higher
increases as the accompanying chart
shows:
LINE OF COVERAGE
Commercial Property
General Liability
Excess And Umbrella Liability
Commercial Auto
BY: CAROL DAVIS
ATLAS INSURANCE AGENCY
Now more than ever, it is essential for
businesses to take a proactive approach
when it comes to their risk management
efforts and their insurance policies. To
help you navigate the hardening market,
you first need a broker who understands
your business and its unique risks
and who will advocate on your behalf.
Secondly, you need an insurance broker
who can tell your risk story to insurance
carriers in a way that will best position
your business come renewal time. Finally,
you need a broker who understands your
industry inside and out, the dynamic
insurance landscape, and how to provide
targeted loss control solutions. +
PRICE FORECAST
· Non-CAT exposed: +10% to +25%
· CAT exposed: +20% to +50%
· CAT exposed with poor loss history: +50% to 75%
· Overall: +5% to +15%
Workers Compensation · Overall: +5%
Cyber Liability
Directors And Officers Liability
Employment Practices Liability
�
· High risk: +40% or more
· Low to moderate risk: +15% or more
· Overall: +6% to +12% or more
· Overall: Flat to +10%
· Public companies: +17% to +50% or more
· Private/nonprofit companies: +15% to +35%
· Certain states and industries: +5% to +25%
· Overall: +15%
Source: Zywave, Inc.
Carol Davis, Executive Vice President of Sales and
Retention, brings over two decades of insurance industry
experience and emphasizes a complete risk management
approach. Carol’s professional experience involves
working with public entity clients throughout the state,
as well as large private sector clients, where she provides
consulting, placement, and day-to-day risk management
services.
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