Risk & Business Magazine JGS Insurance Spring 2020 | Page 25

HARD MARKET
TODAY’S INSURANCE
MARKETPLACE:
Between A Rock And A Hard Place
I
ncreased losses. Skyrocketing
litigation costs. A reduced appetite
for writing insurance in certain
areas. Insurers are taking a hit and
the market for some insurance lines
has turned from soft to hard, increasing
insurance costs for businesses everywhere.
When the insurance market firms up,
buyers may find less competition for
their business, less coverage offered, and
increasing premium rates. Here are some
examples of the hardening insurance
market, along with one potential area of
softness and a plan for renewal time.
PROPERTY MARKET
Industries with poor loss experience or
lagging in their risk control efforts are
seeing major increases in premiums, in the
5 percent–10 percent range, and in some
cases much higher. Food manufacturers,
waste management, and senior living
facilities are among those experiencing
these large increases. As insurers
withdraw from certain lines of property
insurance or reduce capacity, alternative
providers of capital are pursuing these risk
opportunities which will help temper some
increases in rates.
crisis, the #MeToo Movement, or natural
disasters like the wildfires in California.
AUTO
While auto rates have been increasing for
upwards of eight years, a strong economy
is putting added pressure on pricing. More
people working leads to more people on the
roads. A smaller pool of experienced drivers
to draw from leaves the trucking industry
hiring less experienced truck drivers. And
we have all experienced distracted drivers
on the road. All of these factors add up
to a continued upward pressure on auto
premiums, with forecasted increases of six
percent as a baseline.
WORKERS’ COMPENSATION
Workers’ compensation is one area where
insurance buyers are seeing some softness
as the competition for this line of business
is strong. Loss redundancies—a buildup
of reserves—are at levels not seen in 25
years, according to the National Council
on Compensation Insurance (NCCI).
Accordingly, changes in near-term workers’
compensation rates are predicted to be
in a range that may even allow for some
decreases, albeit small (about two percent).
UMBRELLA/EXCESS LIABILITY RENEWAL TIME
Nonrenewal notices are becoming more
common in the umbrella insurance
market. High litigation costs are seen as
a major driver as can be seen in the news
on a regular basis, whether it is the opioid Take these strategies into consideration
when discussing with your insurance
broker how to minimize the rising cost of
insurance due to the hardening insurance
marketplace:
CREATE A PRE-RENEWAL GAME PLAN
1. Start six months prior to renewal
with updates on current market
conditions
2. Facilitate risk and exposure
identification
i. Operation risk
ii. Financial risk
iii. Human/cultural risk
iv. Reputation risk
3. Develop plans to eliminate,
minimize, or transfer these risks
4. Understand the drivers on current
and historical open and closed
claims with total incurred costs of
$15,000 or greater
5. Draft an Executive Summary
i. Highlight your business
operation, challenges, and
opportunities
ii. Declare your ideal partnership
with an insurance carrier and
broker
6. Review and analyze current
coverage terms and limits in
comparison to your current business
risks
7. Evaluate the impact of
catastrophic losses
i. Building replacement cost
BY: CONOR MORAN, CLCS
ASSISTANT VICE PRESIDENT
JGS INSURANCE
Conor Moran is a lifelong resident of Monmouth County and
graduate of Christian Brothers Academy. Conor is a graduate
of the College of Charleston with a degree in Business. Conor
prides himself on providing excellent customer service ensuring
his clients receive the best insurance products to suit their ever-
changing needs. Conor loves to travel and experience new and
different cultures. Closer to home, Conor enjoys spending his
free time with his family and friends at the beautiful Jersey Shore.
ii. Business interruption
iii. Contingency plans
8. Establish a marketing strategy for
insurance placement. +
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