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This is a great recap on what you can expect for your insurance renewals coming up this year.

The commercial property insurance market is finally showing signs of stability after years of challenging conditions, according to a recent report by USI Insurance Services. ?? Policyholders with good loss records can expect flat renewals to 10% increases for the remainder of 2024. ?? However, accounts with poor loss experience may still face rate hikes between 10% and 20%, a slight improvement from the 15% to 30% increases seen in the first half of the year. This marks a significant shift from the past few years, during which property rates have been on the rise since 2018. ?? On the other hand, the liability rating environment remains tougher, particularly for real estate and habitational risks, where assault and battery exposures continue to pose challenges. ?? Average primary general and product liability rates are expected to increase by 5% to 10% for the rest of the year, while umbrella and excess liability rates will be flat to up 12.5% for middle-market companies and 5% to 20% for larger companies. ?? Auto fleets are also facing mixed conditions, with fleets of fewer than 200 vehicles and a good loss history seeing flat to 5% renewals, while those with poor loss records should brace for 20% to 30% increases. Excess auto buffer policies, which sit above primary policies, may increase by up to 40%. ?? In contrast, the workers' compensation market remains competitive, with rate changes for guaranteed costs coverage ranging from -10% to up 3% and loss-sensitive programs seeing -7.5% to flat renewals. ??♂? As risk managers and insurance professionals, it's crucial to stay informed about these market trends and work closely with your broker to navigate the evolving landscape. By understanding the factors driving rate changes and focusing on risk management strategies, you can position your organization for success in the face of these challenges. ?? What are your thoughts on the current state of the commercial property and liability insurance market? How are you adapting your risk management strategies to address these trends? ?? #CommercialInsurance #PropertyInsurance #LiabilityInsurance #RiskManagement #MarketTrends

A damning ruling was handed down by a First-Tier Tribunal Property Chamber last Friday (17 May) where broker Gallagher provided advice to a freeholder to enable them to overcharge leaseholders by 145% and use a captive in order to maximise their income. "In short, we do not find that the Tribunal was presented with the evidence required to show that the premiums charged were reasonable and not artificially inflated by the connected nature of the various parties... As it stands, the Tribunal has not been presented with one item of documentary evidence to suggest that the insurance premiums for the building are competitive." Brian White MBE, acting for his daughter, the leaseholder, claimed (under the Landlord and Tenant Act 1985) that the insurance premium was systematically inflated to maximise the monies being extracted from leaseholders.?The Tribunal agreed. The tribunal was resolutely unconvinced with Christopher Dines, Executive Director of Real Estate at AJG stating: "… in respect of their responses and evidence as to processes applied to ensure fair and competitive insurance premiums, the Tribunal found their evidence to be lacking transparency, economical as to disclosures, contradictory and lacking credibility." The Tribunal agreed that obtaining insurance has become more challenging but ruled that the leaseholder bringing the action had been ripped off and that the freeholder must repay half of their premiums paid for the last four years. I consider this a seismic judgment and shows how the past work of brokers can be examined in great detail should leaseholders feel that they have been overcharged. Their advice as to how and where to place (incl any captive arrangements), what alternative quotations are sought, the state of the risk, etc, were all examined in minute detail and in this case, the interests of leaseholder were not considered (which is in breach of the 1985 Act and in addition to the FCA’s integrity principle). Everything, following the new FCA rules on MOBI, must be done considering their interests too and that will include the use of captives where in the past this has only been done to maximise income for freeholders and/or their property managers. There are 5.2m leasehold properties in England and Wales and I am wondering how prevalent advice of this nature has been (to include excessive commissions, unfair kickbacks and captive arrangements) before the new rules kicked in??Leaseholders deserve reassurance that they have not been exploited and there will be demands for significant compensation if they have, and rightly so.?The FCA should be asking for assurance as to previous advice and conduct and if wrongdoing is found then they should be ready to take enforcement action as many firms and individuals will have profited - I really do think this is necessary as such conduct completely lacks integrity. ? https://lnkd.in/eMJD_Xxb ? ? ?

"That's not enough money to turn in to the insurance, let's just pay that and be done with it." I get it, this seems like wisdom. It seems like it's going to save you money, and in some cases it certainly will. But not always. Sure, if you have a six-figure or more loss it's likely going to noticeably affect next year's renewal with your insurer because they have to recoup at least some of their losses. But consider this: if your commercial insurer is going to raise your overall rates by an average of 10% a year, and that $40k in losses you paid out of pocket doesn't change your renewal at all, you have not saved a dime. You've spent $40k and you feel like you were smart and saved money. Enter the premium to loss ratio. What percent of the premium you pay gets eaten up by claims? If it's 30% or less, I'm told by a number of insurance brokers I respect that's when you are considered a "good risk" by most insurers and that those losses should have a minimal effect on renewal rates. So, if your GL premium is $300k, that means as long as you don't have more than $100k in GL losses in a policy year, you're still in pretty good shape. If your commercial auto is $200k, you could turn in $60k in auto losses and you'd still be considered a good risk. Obviously no losses is the ideal scenario, but insurers anticipate paying losses so a small loss doesn't scare them. If you only turn in a smaller loss and your rates skyrocket at renewal, let me assure you they would have skyrocketed without that small loss. Odds are your insurer got hosed on other accounts, and just in general is raising rates across the board. Bottom line here: there are times where it is prudent to settle a claim without involving your insurance company, and there are times where you're actually costing your business a chunk of change. You need to carefully evaluate each particular incident, and proactively stay in touch with your insurance broker and underwriters to be sure you can accurately gauge which direction is best. If you own or manage a middle or large-market business I would love to talk with you about fractional risk management and how it will add a boatload of value and save your team a lot of time. My initial review and consult are complimentary. DM me! #unbiasedadvice #strategy

Underinsurance condition in property insurance: The typical underinsurance clause is attached below. The clause 1 says the Insured Property in totality should be adequately insured, else underinsurance applies. Clause 2 says this condition applies to each item of insured property. What does this mean? Which clause will apply in the event of a loss? Will either one or both will apply? SITUATION 1: If the total sum insured of the property insured is inadequate, but the individual item affected by the loss is adequately insured, would underinsurance apply? Eg., Total SI is Rs. 9 Crore whereas RIV is Rs. 10 Cr. Loss affected item is insured for Rs.1 Cr and its RIV is Rs. 1 Cr. Would underinsurance apply? SITUATION 2: If the property is adequately insured in totality but the item affected by the loss is not, then would there be underinsurance? Eg., Total SI is Rs. 10 Cr which is adequate, but item affected is insured for Rs. 1 Cr, but its reinstatement value is 1.5 Cr, then would underinsurance apply? To answer this question, let’s take a step back and look at what is the objective of underinsurance conditions. The average condition or penalty is put so that the insurer is not robbed of the premium he should have got had the property been adequately insured. In case of situation 1, the insurer is at a disadvantage as he is losing premium on overall basis eventhough at item level the SI is adequate. Here clause 1 applies but clause 2 does not apply. In case of situation 2, clause 1 does not apply since the overall sum insured is adequate. But does clause 2 apply? This depends on whether the insurer is charging the same rate for all items insured or differential rates. If it is the former, then there is no prejudice caused to the insurer as premium lost on underinsured items would be compensated by higher premium on overinsured items. In case of differential rating, where the insurer would have got a higher premium if the item affected were adequately insured, Clause 2 will apply. Policy wording will not always speak everything. One has to apply logic also to the wording.

As inflation rises and supply chain risk in construction supply chain rises due to climate change, costs of rebuilding damaged properties are rising rapidly. This is already creating underinsured properties. I see this as a hidden exposure in property portfolios everywhere. Essentially climate change systematically inflates claims costs directly or indirectly and the scale of this inflation is growing. What do you think?

The basic essence of any underinsurance clause is that the insured pays adequate premium commensurate to the value at risk he is insuring. The average clause has to be structured accordingly. But, the average also has to ensure that there is ease of application! Fir eg,, if there is a small loss of say Rs. 5 lacs on an item worth Rs, 20 lacs and if the overall SI is say Rs. 500 cr then it does not make any sense to determine the value at risk of the entire property at the time of claim as it will be prohibitively expensive both in terms of cost and time. Hence, we restrict the application of the average clause to the particular item. The above confusion has been created only in respect of the BSUS and BSLUS policies. The wordings of AIFT and IAR are clear. Maybe the drafters of these policies thought that since the policies cover smaller sums insured the entire risk can be valued at the time of a claim

The Leasehold and Freehold Reform Bill continued its progress through the House of Lords yesterday and insurance was discussed a number of times including a desire from Lord Bailey requiring a broker’s reasonable remuneration at market rates to be specified as part of the "permitted insurance payment". He went on to say:- "In recent years, there has been a series of truly horrific stories about leasehold building insurance, including bribes, kickbacks and commissions galore. That is damning. This comes back to my core problem with leasehold: the people paying the bills do not have control over those bills and lack the ability to fire the rip-off companies they have to deal with." "That brings me to my concern. I am doing this on behalf of leaseholders countrywide and campaigning for insurance professionals who have a conscience. How will the Government decide the level at which the permitted insurance payment is set? How will that be set and who will be in charge? What will be the mechanism? Will it be someone’s will, or will we have an algorithm that does that? Is this not just a backdoor for freeholders to extract more money from hapless leaseholders? All I am doing is providing clarity to the eventual definition of "permitted insurance payments. That will ensure that freeholders can no longer abuse their position of power - as the one placing the insurance policy - to profiteer from captive leaseholders who must pay the premium." Further, Lady Pinnock suggested that the FCA ought "to report on the impact of the provisions in the bill around insurance costs in order to monitor progress on reducing costs passed on to leaseholders". This would be interesting as the FCA would have to assess whether it has had an impact in reducing costs for leaseholders and preventing freeholders and managing agents profiting off them. The Minister responded assuring Lords that the sharing of broker commissions would be banned and if landlords and managing agents were to undertake any insurance work then this would have to be via disclosed fees (and not brokers sharing their commissions to facilitate this) and that all "insurance costs must be reasonable." The FCA issued a detailed update on 29th February writing to the government and they were clear that improvements had been made and commissions being paid were down. Plus we've had some notable industry wins involving BIBA (with blocks of 4+ storeys and a major reinsurance scheme). Some of the above points made by their Lordships are historic but insurers still need to look at the premiums being charged and whether these too are fair especially when looking at premiums v claims (premiums too must pass a robust FVA) and the significant profits being made by some insurers. Interesting times and legislators want to ensure a bill is fit for purpose although leasehold as a concept is still the major concern which no party seems to want to touch!

#florida property #insurance market continues to see overall market stabilization following the historic legislative reforms of 2022 and 2023 that enhanced protections for consumers, strengthened Citizens Property Insurance Corporation, and encouraged investment by insurers and reinsurers by providing clarity to the market and the risk they underwrite. Rate filings for 2024 show a slight trend downward for the first time in years. Ten companies have filed a 0% increase and at least eight companies have filed a rate decrease to take effect in 2024. The 2023 #reinsurance market responded positively to these reforms. Early signs from the 2024 reinsurance purchasing season show further positive indications. After years of consecutive underwriting losses, the insurers saw overall stability with many companies reporting a net profit in 2023. Market Conduct: Multiple insurers have been held accountable for behavior that is in violation of Florida law. - Market Snapshot: As of Q4 2023, there are approximately 7.45 million residential insurance policies in force in the Florida property market. Approx. 81% of those policies are written by admitted insurers, as opposed to Surplus Lines companies or Citizens Property Insurance Corporation. Approx. 389k policies have been taken out of Citizens from January 2023 through March 2024. In 2022, Florida had only 14.9% of the nation’s homeowners’ claims, but had 70.8% of the nation’s litigation.Insurers paid about $2.9 billion in direct domestic homeowners’ defense costs and containment expenses in 2022 alone, which include defense, litigation, and attorneys’ fees. The total cost of indemnity paid for claims closed in 2022 was $11.2 billion. The total loss adjustment expenses (“LAE”) paid for claims closed in 2022 was $1.5 billion. Average LAE paid across all perils for litigated claims: $9,934 Average LAE paid across all perils for non-litigated claims: $1,576 OIR has completed 13 market conduct exams of P&C insurers alone in 2024. Eight new companies have been approved to write homeowners policies in Florida o Manatee Insurance Solutions , MAINSAIL INSURANCE SOLUTIONS, Orion180, Orion 180 Select, Tailrow Orange Insurance, CORE Insurance Group Ovation Insurance - In addition to new companies entering the market, OIR approved the acquisition of Trusted Resource Underwriters, to allow the existing company to grow its footprint in the state and expand its underwriting capacity. As a result of OIR’s approval of the acquisition, more than $1.25 billion of capital is being invested into #Florida’s P&C insurance market. Three companies announced their commitment to Florida (Statefarm Insurance Kin Insurance, AAA-The Auto Club Group) with meetings underway with major national carriers. OIR continues to meet with executives from Travelers Progressive Insurance Allstate. https://lnkd.in/edrVNmib

"Waiver of Subrogation in an Insurance Policy" An insurance policy's waiver of subrogation is a legal clause that requires the insured to give up their insurer's claim to collect damages or losses from third parties. Put more simply, if this language is present, the insurance company is barred from suing the at-fault party—regardless of whether they were the source of the insured's loss. How Subrogation Works: When an insurance provider reimburses an insured party for losses or damages, the insurer typically acquires the right to "step into the shoes" of the policyholder and pursue reimbursement from the at-fault party. We call this procedure subrogation. It lowers the total cost of claims and enables the insurer to recoup its compensation. How Waiver of Subrogation Works: The insurance company consents to give up this entitlement in exchange for a waiver of subrogation. The insured usually gains from this in the following ways: 1. It preserves business ties: The insured may have a long-term contract with the third party (such as suppliers or contractors) and wishes to stay out of trouble with the law. 2. It prevents legal complications: A waiver can assist in avoiding lawsuits or other legal disputes between parties that may arise from subrogation claims. Common Scenarios for Waiver of Subrogation: ? Construction Projects: This is frequently utilized in contracts pertaining to construction when a subcontractor or contractor wishes to shield themselves against claims made by the owner's insurance. ? Leasing Agreements: To prevent disagreements over property damage, landlords and renters in commercial real estate frequently incorporate subrogation waivers in their leases. ? Service Contracts: To prevent liability in the event of accidents or damages, a company offering services may ask their client's insurer for a waiver of subrogation. Example: When a tenant's actions cause damage to a landlord's property and the damage is covered by the landlord's insurance, the insurance company will typically attempt to recoup the expenses from the tenant. Even if the tenant is at fault, the insurer cannot pursue payment from them if there is a waiver of subrogation. Importance of a Waiver of Subrogation: ? Minimizes Liability for Specific Parties: It shields the accountable party from lawsuits brought by the insurance provider. ? May Increase Insurance Premiums: Including a waiver of subrogation may result in higher premiums for the insured because the insurer is giving up its right to recover damages. ? Must Be Agreed Upon: The insurance company must authorize this waiver, which is normally requested and discussed between the parties. Conclusion To put it briefly, a waiver of subrogation is a legal arrangement that shields business ties and lowers the likelihood of legal issues by prohibiting the insurer from pursuing payment from a third party that may have caused the loss. #legal#insurance#subrogation