It doesn’t seem fair, right? Your business has gone through enough turmoil in the last 10 months from the pandemic, and just when you think you see a glimmer of light, you get slapped with a 20% price increase on your Property & Casualty insurance program. Well, if it makes you feel any better, you are not alone.
The insurance market functions similarly to the financial market but operates entirely independently and fluctuates entirely differently. We are in what us insurance folks call a “hard market”. Categorized by increased rates, lowered capacity, heavy underwriting scrutiny and much more stringent terms and conditions that insurers are willing to offer. In other words, a bad time to be an insurance buyer. Hard market = hard on the buyer. But why? You might ask. Well, there are many reasons for this.
On the casualty (liability) side, there is the obvious one, the ongoing uncertainty from coronavirus related cases. A slightly less obvious one to some, people (employees, customers, shareholders, etc.) really love to sue businesses and as of recent years, the plaintiffs are being awarded higher judgements in litigation. On the property side, we have a series of natural catastrophes crippling the underwriting profit of insurers who write business in hurricane, windstorm and wildfire ridden areas of our country. “But I don’t do business in California or Florida or Louisiana…” Yes, this might be true, but chances are your insurance carrier does, and they must make up for their losses somewhere. With a tough storm season in 2020 and reinsurance treaties hitting just a few days ago, I will not be shocked if we have another “hard” year in the Property Insurance market.
“Is there anything I can do?” Well, of course there is. The first step is introspective – take a long look into your company’s risk management philosophy. Aside from the insurance policy itself, are you doing anything else to mitigate risk? Do you have a strong safety culture? Do you value the services your insurance broker has to offer? If you thought to yourself “no” to any or all the above, chances are you are feeling the brunt of the hard market. But fear not, it is not too late.
Now, more than ever, it is critically important to NOT be with an insurance broker, but to be with a Risk Management Advisor. A broker simply transacts your insurance policy, you speak to them once a year at renewal and maybe if you’re lucky they shop it around every other year to show they’re still engaged and keep you content. A Risk Management Advisor is fully integrated into your business. They know your business top to bottom, they are at your jobsites on a regular basis, they are involved in every business decision you make, and now, they are proactively coming up with creative ways to fight the hard market on your behalf. Risk management is a team game. The buyer (insured), the advisor (broker) and the insurer (carrier) all must be bought in to the process.
At JKJ, we take our insurance carrier relationships just as seriously as our client relationships. Why? Because it allows us to better serve our clients. Insurance carriers want to do business with quality Risk Management Advisors, because they know that a JKJ client is a client whose insurance they want to write. The client is with JKJ, they must have a strong risk management philosophy. They must value loss control services. They must value the expertise of a Risk Management Advisor.
As we are all gearing up for a much brighter 2021, it is a great time to reflect on how your business endured through the last year. How well did you pivot? Where were the inefficiencies? JKJ spent a bulk of this last year managing a myriad of crises for our hard-working clients – offering our risk management expertise and lending a helping hand in any way possible. If you could have used a JKJ on your side in 2020, it is certainly worth having a conversation for 2021 and beyond. I wish you all a Safe and Happy New Year and encourage you all to reach out to me to find out more about the JKJ difference.
Matt Musilli, CPCU
Vice President, Construction & Real Estate Practice
C: (973) 362-6463