In the last month, AM Best and Fitch (companies that provide financial data products in the insurance industry), national consultants Willis Towers Watson, AON, and others have all echoed the fact that rates are going up and will continue to rise in 2020.
Price increases in automobile insurance were discussed in an earlier blog, but now non-auto liability including management liability and property rates are increasing. Most global insurers are seeing losses trending up and investment income down, driving the need for increased insurance rates.
When rates increase, some classes of business are pushed from the standard market to the excess and surplus lines market. Or the standard markets may keep the best in class but take large increases and impose higher deductibles and self-insured retentions on the liability lines. Some business classes seeing the largest premium increases are properties being exposed to catastrophic risks such as hurricanes, wildfires, and hail. Non-auto liability lines taking large increases are cyber risks for larger accounts, management liability including Directors and Officers Liability and Umbrella/Excess Casualty
Insurers are also taking on less risk and there appears to be less capital coming into the market place. According to David Bresnahan, the executive vice president at Berkshire Hathaway, Specialty Insurance, they will only offer $15,000,000 limits on excess casualty, a reduction of $10,000,000 for new submissions coming to the company.
As the owner of a main street business, what does this mean to you? Trends tend to trickle down in a nonlinear manner. So, an increase of 40% in some casualty lines may translate into an 8-15% increase for you. However, you must take note of this in your planning and budgeting process. In addition, when budgeting, look at your loss history. If you have had multiple losses in a particular line of insurance, budget for a larger increase. As the year comes to a close, if you want to review your Property and Casualty Insurance program for 2020, contact your Trusted Choice Independent insurance agent at Richey-Barrett.