2020 has been a year we will never forget… no matter how much we’d like to. This year has forced us to change in many ways. From the way we do business to how we celebrate the holidays with our families. From struggling with texting to becoming video conferencing professionals, even our elders have had to adapt to this new world. While I am hopeful for a return to what we used to call normal, the realist in me is ready for all these changes to in some way shape or form become a part of our new normal. Let’s call it our 2021 normal. What can we expect in our 2021 normal? As it relates to insurance, this is what you can expect… an extremely hard insurance market! What exactly does that mean?
First and foremost, your insurance costs WILL increase!
This is a trend that started well before COVID-19. Starting in early 2020 reinsurance (insurance for insurance companies) costs were going up which in turn gets passed down to us. The Assignments of Benefits issues we’ve been seeing for quite some time still continue to effect the market. Also, there has been a significant increase in natural disasters across the world. Just look at a few places in the US this year – California and Florida. Each saw significant increases in hurricane and fire activity. And if you wanted to look even further, just this week I received a text from an old college friend who lives in Croatia now dealing with his second Earthquake this year. Can we catch a break anywhere?!
Second, insurance companies capacity will also be reduced into 2021. What does this mean for you? This means your consultants will have to work that much harder to obtain the limits and coverage you’ve been accustomed to getting these last several years in the soft market. If you require high liability limits, you might only be able to get what is necessary through stacking multiple policies. If you had a BOP in years prior, you might have to consider a package policy to get comparable levels of coverage and cost this year. Regardless of the specifics, prepare yourself for changes in the way your insurance program is structured.
What can you do to get ahead of what’s to come? Start planning now!
With 2020 wrapping up the time has never been better to budget for your coming insurance increase. Based on what we’ve seen you can expect around a 10% increase to your General Liability premiums. Your Property insurance will most likely take an even worse hit… some clients have seen excess of 40% premium increases on these coverages.
You should also plan to begin working on your insurance renewals further out than in years prior. If you normally begin your renewal conversation 60 days before your policy expires, consider moving it to 90 days this year. The more cushion you give your insurance consultant the more equipped they will be to negotiate the best program for your insurance needs.
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Written by Robbie Korth
If you have any questions, please feel free to contact Robbie Korth at firstname.lastname@example.org