WELCOME FRIENDS AND VALUED CLIENTS OF JGS INSURANCE , A BALDWIN RISK PARTNER
I
’ d like to make you aware of some ongoing developments in the insurance industry during this hard market period so you can make the necessary adjustments to your budgets as early as possible . Unfortunately , due to a number of factors , rates are continuing to rise .
For most businesses and community associations , insurance premiums are your highest budget item . Planning ahead can help you avoid last-minute surprises that might result in you tapping into your reserve fund or passing a loss assessment to cover those costs .
We are also anticipating property rate increases of 5 %– 8 % due to the increased frequency and severity of natural catastrophes . While the first half of 2022 experienced lower natural disaster losses compared to the same period in 2021 , the United States still had around $ 28 billion in losses . Estimates from Hurricane Ian are ranging between $ 50 billion and $ 74 billion , which puts us on track to exceed the 2021 loss total . Hurricane Ian is likely the worst insurance loss event for Florida since Hurricane Andrew in 1992 and a Top 5 Global Catastrophe Event .
The majority of any property-related increase you should expect next year will be due to increased replacement values for buildings . We expect building value increases of 10 % or higher in 2023 , due to the following reasons :
• Cost of materials – Due to supply chain issues and increased demand , costs for materials like lumber and steel continue to be elevated .
• Cost of labor – Labor costs have been rising , partially due to labor shortages .
Insurance carriers use industry-standard building valuation software to determine the estimated replacement costs for buildings based on square footage , construction type , occupancy and location . In the absence of a recent professional appraisal , insurance carriers will go by the value determined by the software they use when determining the necessary building value .
You will see increases in the following liability insurance in 2023 :
• Casualty / liability insurance : 5 %– 30 % increase
• Automobile liability : 6 %– 10 % increase
• Cyber liability : 30 % or higher
• Directors ’ and officers ’ liability : 8 %– 10 % increase
• Umbrella / excess liability : 30 % increase
Here ’ s what you can expect in the coming months :
Your insurance rates are based on property values , liability exposure , and your claims history . Changes in any one of those items will influence the price of your insurance .
As these costs increase , insurance premiums will be affected . At a minimum this year , we ’ ve been seeing around 10 %– 15 % increases on noncoastal accounts with no claims history . At the high end , we ’ ve seen 25 % increases from some carriers , even if there haven ’ t been any claims . For coastal communities and accounts in the Excess and Surplus market , 40 % or higher increases are not unheard of . We expect those increases to be even higher in 2023 .
We will continue to do our due diligence and make sure you have comprehensive coverage at a competitive price . This includes marketing your insurance to additional carriers if we are seeing higherthan-normal increases from your current insurance company .
Where available , we will try to place coverage with carriers that offer Extended Replacement Cost and Guaranteed Replacement Cost to help protect you from additional increases in building materials , helping to prevent you from being underinsured part way through your policy term .
As always , please don ’ t hesitate to contact us if you have any questions or concerns . +
VINNIE HAGER , MANAGING PARTNER JGS INSURANCE , A BALDWIN RISK PARTNER JGSINSURANCE . COM
3