Property Insurance: State of the Market and How to Navigate

Maintaining a cautiously optimistic attitude, it is anticipated a healthier property market is on the way in the months ahead as compared to 2023. With positive feelers out from insureds and brokers, a heightened feeling of hope can only help us all feel a little relieved. That does not mean there will not be challenges ahead. We advise everyone to keep their ears low to the ground to prepare for anything that may come their way. Even the definition of healthier can be subjective and in this case, it is truly a lesser drastic season of market instability and by looking at it in these terms, smaller victories are still wins.

Positive signs giving us these insights into a more stable market are coming from for the first time in about 5-7 years, property underwriters had exceptional premium growth due to a higher rate environment and reduction in their line sizes while achieving increased insurance to value. Topping this off are single to double digit ROEs and possible disinflation being on the horizon.

With the positives outlined, where are the challenges? We still have tightened underwriting, concerns of coverage terms and flexibility, but the main concern is the ever-present threat of geographic catastrophe.

• The first 9 months of 2023 underwriting losses were more than double than the year 2022.
• In 2022, 15 separate billion-dollar weather and climate disasters impacted the United States.
• In 2023, 28 separate billion-dollar weather and climate disasters impacted the United States.

Natural disasters aren’t something that we can necessarily control, so some advice moving forward:

•  Maintain up-to-date site inspections and continue to remain focused on loss prevention.
• Keeping records of any and all property updates is key and making sure to outline plans and timelines for capital improvements.
• Work with your broker to get creative on terms. With underwriters restricting limits/deductibles and terms there are creative ways to structure programs these days.
• Build a relationship with your underwriter. This is still a relationship business and a positive stable relationship with an underwriter will go a long way.
• Make sure to closely review property terms with your broker to understand how they work. ABI