Can you handle a 50% increase in a commercial property premium? I've seen it recently - so let's discuss what's going on.
Changes are coming for commercial property owners in Georgia during 2021. Some may have experienced these changes with their renewal already, for others that letter might still be on the way! Judging by my experience in the last quarter of 2020, we are in for a bumpy ride.
The last 3 years, and in particular 2020, have seen many large loss events - Named storms, wild fires, domestic disturbances, COVID, or just 2020 being 2020. Across the board, insurance companies are implementing changes dealing with these losses.
Rates are rising significantly for many types of occupancies, for example: condominium associations, habitational and even lessors of retail spaces. Some companies are adding conditions like 2% wind deductibles, even in inland areas, to policy renewals. To illustrate this problem – a $10m apartment complex with a 2% wind deductible that suffers a loss from a tornado would have a 200k deductible. Additionally, some companies are tightening up on the classes of property and underwriting requirements which will find insureds being non-renewed – forcing them to find new coverage without a plan.
These changes are significant and you need to start now to have a plan in place to deal with renewal challenges.
- Evaluate and improve your property maintenance programs. A well-developed program to inspect, repair and perform regular upkeep can help provide an agent with the ability to either request credit or shop effectively.
- Security programs around cameras, lighting, monitoring and employing property management firms are added improvements that can limit losses and increase premium credits.
- Make sure a recent and accurate reconstruction cost estimate (RCE) is performed and you have a copy of the parameters used to evaluate your property. Property policies have automatic inflation processes that will increase the replacement cost of the property overtime at renewal. Depending on the local situation, you may need to adjust your replacement cost for the property.
After these are in place, prior to renewal, you should review your current policy, coverages, and values with your agent to be sure you have a proactive plan in place for the next few years.
Small businesses are on a rollercoaster. Knowing this turn is coming will make the ride easier.
If we can help with that plan, give us a call at (770) 487-8310
Commercial Account Executive