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