Consumers and insurance carriers are facing a volatile property insurance landscape. Major carriers like State Farm and Allstate are halting new homeowners insurance policies in California due to accelerating catastrophic claims risk, and Florida residents are paying an average of four times more for homeowners policies. Carriers serving Texas are still reeling from ice storms that caused an estimated $10.3 billion in total losses.
Colorado has seen year-after-year catastrophic losses from hail to wildfire statewide. Colorado ranks second in the country for hail insurance claims, and data from the Rocky Mountain Insurance Information Association shows that over the last 20 years, Colorado has seen a 275% increase in natural disaster occurrences.
It’s impossible to predict the future, but it’s clear we’re at a crucial inflection point. 2023 mid-year renewals saw risk-adjusted property-catastrophe pricing increase an average of 25% to 40%. From coast to coast, accelerating rates of catastrophic claims like wildfires, earthquakes, hail, and hurricanes put pressure on insurance carriers, resulting in a ripple effect on consumers.
Just because someone doesn’t live in an area at risk of catastrophes doesn’t mean they are immune to rate hikes and narrowing program availability. Anecdotally, homeowners in non-catastrophic risk areas are seeing average rate increases of 10% to 20%, and homeowners in catastrophic risk areas are experiencing a 30% to 100% increase.
Instead of focusing on the insurance impact in a specific area or state, consumers need to embrace a broader perspective and realize that global strain on the market will have a direct effect on the cost and availability of insurance options, no matter where they live.
Affluent consumers that previously had three or four insurance carrier options for their entire program may now need to split their program with multiple carriers to find the best solution.
We know that ever-shifting market conditions outside your control are frustrating, and we want to empower you with the knowledge and resources to reinforce your long-term risk profile.
“Now more than ever, carriers are going to start rewarding clients for proactive loss prevention efforts,” shared Andy Orlando, Senior Vice President, Partner in CCIG’s Private Client Group. “High-net-worth individuals and families need to work with a broker who understands the home improvement tactics and risk mitigation strategies that will position clients favorably with carriers.”
Depending on the home’s location and loss history, strategies could include:
For clients in catastrophic exposed areas or those with prior losses, investing in improving your risk profile will present better to carriers and can result in more favorable coverage and premium options.
The right advisor partnerships make all the difference in a highly competitive environment. The balance of power has shifted – where consumers used to have their pick of insurance companies, now carriers are putting clients under a microscope.
The marketplace is narrowing, so selecting a broker specializing in the high-net-worth space with carrier access and scale with carriers is tremendously important. Your broker is responsible for telling your story and presenting your insurance program in the most favorable light to insurance carriers.
While insurance has often been an afterthought, consumers need to put it at the top of their to-do list. Whether you are buying a new home or renewing your current policy, be prepared to face more underwriting questions than in previous years.
“There’s no better time to make sure you have a long-term, data-driven insurance strategy,” said Orlando. “Carriers are leveraging data to drive their underwriting coverage decisions, so your broker should have the technical expertise and analytic capabilities to equip you with the information to make well-informed decisions.”
As insurance carriers combat a hardening market, clients must be prepared to demonstrate concerted efforts to protect their homes.
CCIG’s Private Client Group has the expertise, network, and vendors to support clients with implementing risk mitigation strategies for their homes. We also understand how to maximize these strategies to present the strongest case to our high-net-worth carriers.
If you have any questions, please contact our team at email@example.com.
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