More on Market Changes

Yes, Virginia, there is a Santa Clause.  He is about to turn into Scrooge, though. 


I recently wrote that I am seeing signs that the market is starting to leave the "buyer's market" part of the insurance cycle.


Here's some more...


The editors of the John Liner Letter put out a memo recently with the following:


"In a market already wracked by over $15.5 billion in weather-related insured losses in the United States, many feel that a heavy hurricane season could tip the industry into a hard market. Property insurers will be seeking rate increases for some risks as catastrophe losses continue to erode insurer profits. Insurers are also turning toward an updated Atlantic hurricane model that includes predictions of higher inland wind damage, which could indicate that current pricing and underwriting standards may not be adequate."


They then point out that the industry enjoys a healthy $565 billion dollar surplus.  I have been saying all along that it is the surplus that keeps us in a buyer's market - supply and demand - lots of insurance capacity without high demand.


Predictions of horrible weather abound.  Insurers will use that as their reason to try and increase prices.  I'm not sure what you see.  However, here the local weatherman cannot predict the weather next week.  I don't know how anyone can predict it for next month - or three months.


The key here for insurance buyers is three-fold:


1) Be a desirable risk - If your business has low losses and is well managed and thriving, insurers will flock to you.


2) Be a demanding risk - Set expectations for service from your agent and insurer.  Hold them to your standards.  


3) Negotiate - All aspects of every insurance policy are negotiable - coverage, price, and service.  You must be in a position of strength.  Know what you are asking for.  Know the insurance marketplace.  Know what you can ask for.  Practice great negotiation skills.


The John Liner memo mentioned above counsels preparedness and loss prevention.  Absolutely true.  There is more though.  There is always more.  You must have knowledge on your side.