Over the past 12 months, the pandemic has added fuel to the fire, piling problems on to a market that had already been under pressure for some time due to natural catastrophes. However, noted Belgarde, COVID-related losses are only one piece of the puzzle when it comes to determining the culprits in this hard property market.
Several years of large natural catastrophe losses led to a quick rise, then subsequent fall in rates, she explained, adding, “It was not until we saw a significant reduction in capacity – especially on the large property programs – and the pull back and restrictions placed on the London marketplace, along with continued large loss events, that we saw the rate increases hold.”
Markets completely walked away from certain sectors of business, including habitational, wineries, stock throughputs and recyclers, which resulted in carriers becoming much more restrictive on coverage terms. After all, these risks proved to be too high, as habitational accounts were being hit with fires, hail, and tornadoes, and wineries and wood product manufacturers were the victims of wildfires and smoke damage. An increase in the frequency of named storm events that damaged coastal communities and led to unprecedented inland flooding likewise drove losses and made markets increasingly nervous.
As if the property insurance market wasn’t difficult enough given these developments, COVID-19 created another layer of challenges.
“When you add in the unknown and unexpected losses from a pandemic, you see rates increase steadily across all areas of property insurance,” said Belgarde.
COVID-19 pushed the spotlight on to risks with significant business interruption exposures, which meant that accounts that were BI driven were no longer able to get the limits and coverages they had previously, even with the increased pricing, explained the Worldwide Facilities expert, who added that on a positive note, “Rates will continue to rise through 2021, but the average increases will not be as high as they were in 2020.”
Belgarde recommends that in this ‘new normal,’ retail agents operating in the property insurance market should team up with a knowledgeable, experienced expert in the types of business they focus on. One such resource is Worldwide Facilities, which has the expertise, knowledge, and relationships needed to help retail agents navigate through a tough marketplace.
“Whether through a specific carrier or a wholesaler, retail agents can set themselves apart by staying educated on what the marketplace is doing, evaluate how coverage can be modified to meet specific needs, and instruct insureds on better ways to manage risk,” Belgarde told Insurance Business. “At Worldwide Facilities, our specialists provide creative ways to obtain the coverage that retailers’ clients need. Internally, we have a vast network of brokers and underwriters who collaborate together across the country to provide information that enables us to place difficult risks and solve coverage needs for our clients.”