Continued excess capacity and a sluggish economy have made it difficult for insurers to post positive returns.  As a result, many carriers now look to the one thing they can rely on for definitive financial impact:  RATE INCREASES.

The winds of change are afoot.  Property markets are starting to push rate and resist the feeding frenzy that shaped a seemingly endless soft market.

Unlike historic market turns, the current shift is not instigated solely by a catastrophic event, but rather by the tangible impact of long-eroding underwriting fundamentals.  Simply put, once you’ve hit the floor there’s not much lower you can go.

The most apparent testament to this trend is currently found in FRAME HABITATIONAL risks, where increased underwriter discipline is palpable.  Insureds in this space are facing a ‘double whammy’ from the confluence of two events:

• Underwriters are more apt to use independent building cost data providers to determine ITVs (Insurance to Value) rather than reported values.  Grossed-up ITVs will translate to increased premiums.
• Underwriters are pushing for an increased rate structure on these higher values.

What this means for Frame Habitational risks is that flat or decreased premiums are difficult to come by.  Even squeaky-clean risks are seeing 5% to 10% increases.  Certain markets are drawing a line in the sand and will seek increases up to 20%.  Many standard carriers may non-renew Frame Habitational risks and force them into the excess and surplus lines market.

With a limited amount of capacity in this class, SPEED TO MARKET is critical, as is the positioning of that risk to an underwriter.  Make sure your broker has the right access points and expertise to get your risk priced competitively and with the broadest terms and conditions that the market will bear.

Preferred Brokerage specializes in placing complex risks in a transitioning market.  Contact us today to learn how best to access shrinking capacity for Frame Habitational risks.