At Weaver Insurance, we value your trust and aim to maintain transparency, especially when it comes to matters that directly impact you. With that sentiment, we wish to share some critical insights into the current global insurance market and how it may influence your insurance premiums. As a locally owned business, we like many of you are very concerned for our community. We invest many hours and dollars to do our part in keeping the local economy strong. I encourage you to read this publication, if anything it will help you understand to some degree how much we care and work to protect you.
**Navigating Through the Hard Insurance Market**
You might have heard or read about the ongoing "hard market" in the insurance industry. If you’re unfamiliar with the term, a hard market is characterized by a high demand for insurance coverage and a reduced supply. Several factors contribute to a hard market, such as significant losses from natural disasters, economic shifts, or global events that create an unstable environment for insurers. Your insurance carrier must remain solvent to maintain its status with the State Insurance Department. If solvency becomes an issue, this means they cannot pay the claims expense for your policy and then lose their authority to write business in your State. By remaining solvent, actuarial and underwriting changes must take place. Many times it is placing more responsibility to self-insure your exposures than what we are used to seeing.
How did the economy affect insurance carriers? Simply put... the premium you pay is calculated by the potential for loss. Whether that is litigation for bodily injury claims with your auto insurance or the cost of rebuilding your home or business. When the COVID era was in full force, EVERYTHING significantly increased in cost, which caught the insurance companies off guard. They did not charge enough premiums to pay for those losses. A year or two later, just about every insurance company in the world is at a 100% + loss ratio. They are all financially struggling.
Below are some things that we are seeing. Obviously, we can go deep into the weeds about the insurance market, and very happy to dive deeper with you over the phone or at the office if you have questions. We have links that will take you further into some articles that we have shared with our policyholders to explain in depth the global scene of insurance. Please read further here: How Long Will The Hard Insurance Market Last? - AgencyEquity
**Key Characteristics of a Hard Market:**
Increased Premiums: Insurers raise premium rates to compensate for higher claim costs and to maintain a financially stable position.
Stricter Underwriting: Insurance carriers often adopt more rigorous underwriting standards, making it tougher to qualify for certain coverage.
Limited Coverage: There may be more limitations on coverage, and certain risks may not be insurable at reasonable prices.
Pre-Bind Issues: Insurers are placing holds on new businesses, limiting the quick purchase of coverage, declining risks, and putting agents through the wringer to prove the risk. This delays coverage issuance slows quoting down, and makes for a difficult landscape for agents and clients to navigate.
Reinsurance: The global insurance carriers that insure your insurance company from catastrophic losses, at this point in time, are at capacity and are pushing the catastrophe losses to your insurance company to absorb. Your insurance company then spreads the extra cost and limitations to all of the policyholders.
**How Does This Impact Your Insurance Policy?**
The shift into a hard market may bring about adjustments in your premium and policy terms upon renewal:
Premium Rate Increase: You may experience an increase in your premium rates as insurers recalibrate their pricing models to safeguard against prevalent risks and potential claims.
Policy Terms and Conditions: You might notice alterations in the terms and conditions of your policy, which may include adjusted coverages and potentially higher deductibles. Causing you to self-insure many of the smaller claims or the riskier exposures.
**Next Steps and Keeping In Touch**
Deductible Increases: We recommend for the next year to consider increasing your deductibles. Especially for Wind / Hail losses. This will help lower your premium, however, you must plan for your additional out-of-pocket expense during a claim.
Bundling: Insurance bundling discounts are helping everyone save money. If you do not own a home, a renters policy will help. If you do not have an umbrella policy, this will help.
Reconstruction Values: During the Covid Era, your cost to rebuild your home or building was hyperinflated, we can look at that and see if it's wise to lower those limits some. We encourage you to look very closely at your coverages.
Driving Discounts: Not a fan favorite item, however, this assists you in saving up to 20-40% (depending on the insurance company) off of your auto insurance premiums. The program tracks data for hard-breaking and accelerating trends and certain hours of the night (Midnight to 4 a.m. is not desirable). If you are not abusing those, your savings will be worth the annoyance of being tracked for 90 days. I tell everyone who considers it, if your phone is tracking your location, you might as well earn some money doing so. Just my opinion. I personally saved 23% with 3 teen daughters driving. It helped tremendously! Sadly, the auto insurance rating is so archaic, that driver monitoring is the only way (so far) that insurance companies have to fine-tune your premiums to how you drive. As technology improves, insurance will too.
**Our Commitment to You**
At Weaver Insurance, we understand that these changes are concerning, especially during uncertain times. Here’s how we pledge to navigate this challenging market together with you:
Transparent Communication: We will keep you informed about any changes or updates regarding your policy and the overall market scenario. Please always read your policy documents mailed/emailed to you.
Tailored Solutions: Our team is dedicated to exploring and suggesting the most efficient insurance solutions that align with your needs and financial circumstances as best as we can. Please give us the opportunity to help you. Financial strain causes enormous stress on anyone. We need to understand your situation so we can help.
Risk Management Assistance: We offer resources and guidance to help you mitigate risks and potentially offset some premium increases through enhanced risk management practices.
I encourage you to reach out to Lorna, Jen, or myself for any specific questions related to your policy. We are doing our very best to help every customer stay insured at a budget they can afford.
