A Volatile Market in 2023
Hard to believe that Concierge Insurance Solutions just entered our sixth year. Our niche boutique started with three of us focusing on the highly underserved Personal Property & Casualty Ultra-High-Net-Worth (“UHNW”) market. Today our eight (soon to be ten) extraordinary professionals service 180 families and their advisors, with clients located in over 40 states. We’re proud that we’ve received so many comments like “Most responsive service provider I’ve ever dealt with.”
The purpose of this memo is to briefly update you on emerging trends in our market. Storm clouds have been brewing over the last few years, with catastrophic losses from historic floods, hurricanes, wildfires and freezing. Rising inflation, interest rates and loss costs, the looming threats of recession, climate change and geopolitical upheaval are causing large premium increases almost across the board. A number of carriers are non-renewing policies, withdrawing from certain risks and even totally withdrawing from some states, so capacity and access become essential to obtaining the right coverage.
About three weeks prior to your renewal we will discuss our recommendations with you, including ways to further optimize coverages, implement additional risk mitigation strategies and/or transition to other carriers. Our goal is to help navigate clients and their advisors through this volatile market, to obtain the right protection and to explore ways to help offset the upcoming (albeit inevitable) premium increases.
CHAOS IN FLORIDA AND CALIFORNIA
In Florida, 15 property insurers recently became insolvent, leaving over 500,000 policyholders seeking alternative solutions. In California, AIG announced that it is non-renewing all of its admitted homeowners policies. An admitted insurer has been approved by the state’s insurance department and is backed by the state’s guarantee fund, whereas a non-admitted insurer is not.
Lawmakers and regulators in both states have imposed strict limits on the amount of premiums that can be charged by the admitted companies. Most UHNW carriers who continue to operate in FL and CA are now almost exclusively offering coverage by their non-admitted company in order to charge the amount of premium they require to underwrite the higher risks and to pay the significantly increased reinsurance rates.
We are comfortable with some of the non-admitted carriers based on their financial wherewithal, reinsurance arrangements and ratings. Part of our comfort lies in the fact that the same underwriting, claims and service teams are often used for both an UHNW insurer’s admitted and non-admitted companies.
THE AUTOMOBILE INSURANCE MARKET
2021 was the deadliest year for traffic fatalities since 2006, resulting in more severe insurance claims. Because of supply chain snafus, auto repairs take longer, so insurers pay more to provide rental cars. Another factor in rising auto premiums is the cost to replace the more sophisticated technology imbedded in newer model cars.
RISK MITIGATION STRATEGIES
2023 market conditions call for more self-insurance, higher deductibles and renewed focus on risk mitigation strategies. Most of the UHNW carriers have complimentary hurricane, flood and fire services, as long as you sign up for them; we also recommend private contractors when appropriate. More insurers are requiring Automatic Water Shut Off devices, and a host of other proactive steps can help reduce your risk and your premiums. The Ukraine war has elevated the threat of cyberattacks globally. The top carriers are providing higher limits of cyber insurance, and private vendors can help prevent or mitigate cyber exposures.
Today there are only seven carriers generally recognized as serving the Personal P&C UHNW market: AIG, Berkley One, CHUBB, Cincinnati, Nationwide Private Client, PURE and VAULT. Concierge is contracted with all seven, whereas a majority of the independent brokerages are not. In addition, we access a number of other carriers such as Great Lakes, Lloyds of London, Scottsdale and Treadwell through specialty relationships.
We are so excited by–and appreciative of—the relationships we have built with our clients and advisors, and will continue our fierce advocacy on your behalf.
Best wishes for a healthy and satisfying New Year, despite the volatility you’ll likely experience in the P&C market!