Risk & Business Magazine JGS Insurance Spring 2020 | Page 3

Welcome!
LETTER FROM THE PRESIDENT
W
e continue to see a
hardening/firming
of the insurance
marketplace through
the 4th Quarter
2019 and into 2020. According to The
Council of Insurance Agents & Brokers
(The Council) quarterly Commercial
Property/Casualty Market Survey,
“respondents reported rising premiums
for all account sizes and all lines of
business, with the exception of workers
compensation. Premium increases by an
average of 7.5% across all-sized accounts,
compared to an average increase of 6.2%
in Q3. Large accounts were again the
hardest hit in Q4 2019, with an average
increase of 9.4%, followed by medium
accounts with an average price increase
of 8.0%. Small accounts saw an increase
of 5.02%.”
Commercial Auto and Umbrella had
an average price increase of 10.5% and
13.6% respectively - the first quarter
pricing increases have broken double
digits since 2003. Commercial Auto
prices have been increasing steadily
since 2011; however, the rate of change
for Umbrella prices was noticeably more
accelerated than any other line. We are
also experiencing a reduction in capacity
for high limit umbrellas as well. You can
read more about market expectations
in 2020 for specific lines of coverage
in Conor Moran’s article “Today’s
Insurance Marketplace: Between a Rock
and a Hard Place” on page 25.
When I started writing this letter the
stock market was booming and reaching
new highs each week it seemed. Well,
things are changing rapidly as we have
experienced a market correction of
-11.4% in one week, one of the worst
weeks for global markets since the
2008 financial crisis. The rapid selloff
has been attributed to the rapid spread
globally of the Coronavirus COVID-19
and the inevitable disruption this will
have on the global economy. Much of
these effects will not be felt until much
later as supply chains will be interrupted
and manufacturing will be slowed due
to closures and delays. Global travel has
been in disarray with multiple flight
cancellations, cruises being quarantined,
and hotel cancellations due to decreased
travel. All eyes are on the Summer
Olympics to be held in Tokyo, Japan.
This too will affect the insurance
marketplace. There are primarily only
two sources of income for insurance
carriers: underwriting profit and
investment. Insurance carriers are
dependent on investment income to
offset underwriting losses they have
experienced over the past several
years. If the stock market continues to
deteriorate, this could put additional
pressure on carriers to increase
prices even further to offset loss or
investment/interest income. I won’t
even mention the uncertainty in the
political landscape with the Presidential
Election coming up in November!
I mention all of this to make you aware
of the rapidly changing events that
will continue to cause disruption and
tightening of the insurance marketplace
in 2020. I look forward to the warming
weather and hope the only talk of
Corona’s are at the Tiki Bar and whether
or not I would like a lime with it! +
Vinnie Hager, President
JGS Insurance est. 1919
JGSINSURANCE.COM
3