Risk & Business

As a result of the insurance companies continued march towards gaining a competitive edge on each other, and gaining market share, they are starting to show both a loss of income and underwriting losses. As in all the previous cycles when the industry is mired in a "soft market", the industry is entering the next phase whereby profits are starting to decline due to their price cutting and lackadaisical approach to underwriting. Instead of taking a long term view and pricing their product appropriately, they continue along the same well trod path as they have for what seems like eons. While this soft market benefits the consumer while we're in it, the consumer will suffer when the industry makes it's standard correction by increasing pricing and enacting tougher underwriting. This of course hits you in the wallet and also increases the difficulty in obtaining insurance for those with spotty loss histories. Please click on title for more in depth information on thi...

Another storm is forming in the Gulf as of this morning. So far this season, and last, we've been pretty lucky. Due to the lack of significant storms, and subsequent damage caused by them, the market has continued to soften. Currently the insurance industry is in the midst of a very soft market. In industry parlance, "soft market" refers to significantly decreasing insurance premiums. How long can we continue? Some in the industry are predicting a continuance of this trend for at least another year. Insurance companies, and reinsurance companies, those companies that provide the insurance for the standard insurance company, are flush with cash and are looking to gain market share. Traditionally this is done by decreasing premiums in order to write more business. We are currently deeply mired into this cycle. Besides the subprime mortgage issue raised in our previous post, a more obvious impact on premiums are the amount of claims and dollars paid out due to dam...

There has been a lot of talk about how the sub prime mortgage collapse may affect the over all economy. With this in mind I wondered how this can effect our business insurance clients. My thought was if the insurance companies had significant amounts of their investment portfolio invested in mortgage backed securities, there might be some impact on rates to the consumer. Well from the latest articles in the industry news, it seems the insurance industry is not going to be affected. This is good news for small business clients, who will most likely continue to see competitive rates for business insurance into next year.

With a tropical storm forming off the coast of the Carolinas and possibly forming into a Cat 1 or 2 hurricane, just thought it might be a good time to think about taking a look at your policy coverages. Are you covered for potential wind damage? How about flooding? Do you understand the difference between wind driven rain and storm surges and how they affect your coverage? Might be a good time to ask these questions before and not after the fact.