This week in insurance

Hello everyone. This week in "insurance is simple, not easy" I just wanted to give a traditional newsletter update on the market. If you want to skip the newsletter - the high level overview is "it's tough". Thanks for reading ;)

• Commercial insurance rates continue to rise.?An industry report found that commercial insurance rates rose by an average of 7.3% in the first quarter of 2023. The report cited a number of factors for the rate increases, including inflation, supply chain disruptions, and labor shortages.
• Cyber insurance premiums surge.?The cost of cyber insurance has surged in recent months as the number of ransomware attacks has increased. A number of reports were released in the last weeks and the cumulative analysis is that cyber insurance premiums rose by an average of 50% in the first quarter of 2023.
• Florida's Citizens Property Insurance Corporation seeks rate increase.?Citizens Property Insurance Corporation, Florida's state-run insurer of last resort, is seeking a 13.4% average rate increase for its homeowners policies. The rate increase is being sought to cover the rising cost of claims, which have been driven by a number of factors, including hurricanes, flooding, and wildfires.
• Allstate and State Farm leave California market.?Allstate and State Farm have announced that they will be leaving the California homeowners insurance market. The two insurers cited the high cost of doing business in California as the reason for their departure.

Additional news items:

• Construction industry's rebound brings more opportunities, but also more risks.?The construction industry is rebounding from the COVID-19 pandemic, but with it comes an increase in risk. Insurers are warning contractors to be prepared for a surge in claims, particularly for property damage and bodily injury. This is certainly being seen across the products liability and personal injury space.
• Threat actors back to cyber “big game hunting.”?After a brief lull, threat actors are once again targeting large organizations with sophisticated cyberattacks. Insurers are warning businesses to take steps to protect themselves from these attacks, which can cause significant financial and reputational damage.

Mid-season reinsurance renewals are underway, and it is shaping up to be another year of significant rate increases. According to a report from AonRe, risk-adjusted property catastrophe reinsurance pricing is up an average of 33% within a typical range of 25% to 40%. The lowest layers of reinsurance towers proved most challenging, with some reinsurers demanding higher attachment points to reduce claims frequency.

There are a number of factors driving the rate increases, including:

• The increasing frequency and severity of natural disasters.
• The rising cost of claims.
• The need for reinsurers to rebuild their capital after a series of large losses.

The rate increases are likely to have a significant impact on insurers and their policyholders. Insurers will need to pass on the higher costs to their customers, which could lead to higher premiums. Policyholders may also see their coverage limits reduced or their deductibles increased.

All of this is to say that the market is ACTIVE! It is really, really dynamic and we're here to help you keep up.

Please reach out to me if you have questions.

Brandon Schuh

[email protected]