Navigating the 2023 Insurance Renewal in a Hard Market

2022 started off with promise, the end of the pandemic was upon us, or so we thought. Workers were heading back to the office, sort of, and the early insurance renewals were not seeing the huge pricing increases of 2021 and 2020, just kidding. The second half of 2022, however, saw the insurance industry hit with two major hurricanes in Florida causing losses of unimaginable numbers and the capacity for natural catastrophe coverage shrinking. This coverage curtailment carried all the way through January 1, 2023, treaty renewals. There is an expectation that the unused treaty capacity may show up as strategically priced facultative capacity. The likely coverages with expected higher premiums are property, lead and excess casualty programs, and cyber coverage but no coverage is safe in 2023.

Property insurance, already hit with huge losses, will see premium increases for those locations with natural catastrophe and earthquake exposures, coupled with lower capacity and higher retentions. General Liability, Automobile, Umbrella/ Excess Liability, and Project Specific CIPs will certainly see similar increases in premium, reduced capacity, and higher retentions. Cyber underwriting, as has been the trend in recent years, is focused on understanding the risk with the best pricing going to those firms with the best loss control. There does not seem to be an area of business insurance that is predicting a decrease in premiums. We are definitely still deep in a hard market, even for the best of risks.

Navigating your renewal will require Risk Managers to develop a strategy yet remain flexible, recognize risks and opportunities, and communicate

 The question many Risk Managers are asking is, “How do I proactively seek solutions to address the hard market?” The insurance market conditions affect various industries differently but some of the overarching themes for a 2023 renewal are:

•Prepare for your renewal early – early is a must. give the scrutiny happening with each submission to each market.

•Develop a strategy for telling “your story” – who you are, why you are different, and how you will make a good partner for an insurer

•Review your limits and retentions – these will be central to your renewal discussions and entice the right carriers to offer coverage at the best pricing

•Analyze your coverages – determine what is a need versus a want versus a nice to have.

•Understand your property value and construction types - probably more important if you are growing is what will your account look like in a year.

•Scrutinize your losses – what have you done differently since a problematic loss occurred, how are you addressing frequency

Navigating your renewal will require Risk Managers to develop a strategy yet remain flexible, recognize risks and opportunities, and communicate. Be able to share details about your organization, internal processes, company direction, and culture. Expound on your knowledge of your exposures, and create charts and pictures that tell a story. Do some of the underwriters work for them? Most importantly communicate and collaborate! Keeping your broker informed of changes to your risk, setting expectations internally, and telling your story are your best strategies. Benjamin Franklin once said: ‘Time is Money’ – if a Risk Manager invests the time, the increases just may be less than if no investment was made.