Eric Jesse of Lowenstein Sandler's Insurance Recovery Group discusses the current state of the real estate insurance market and offers three tips companies can use to make commercial property a more attractive risk to insurers.
Eric Jesse: Hello, this is Eric Jesse with the Insurance Recovery Group at Lowenstein Sandler, and welcome to “In the Know.”
Today, we'll discuss the current state of the P&C insurance market and three ways companies can become an attractive risk to insurers.
Commercial property insurance is a core coverage for businesses. It protects a business's buildings and structures, the real property, equipment and other personal property contained within them against loss and damage. Property insurance typically covers business income lost as a result of a covered event. This coverage has come into focus during the COVID-19 pandemic, when businesses have been forced to close or operate with limitations.
So what's happening in the market? Multi-billion dollar natural disasters, supply chain issues, and inflation problems are some of the events that are leading to big losses and insurance payouts, and a stiffening of the insurance market that matters to you. This means higher premiums, but it also means insurers are raising deductibles, lowering limits, adding sub-limits, and including more restrictive coverage grants and broader exclusions.
Nonetheless, there are several things companies can do to weather this tough market, minimize the impact of these widespread events, and ultimately become a more attractive risk.
First, work with a knowledgeable broker or insurance advisor who knows the market inside out and can advocate on your behalf. And be proactive: Don't wait until your policy is due for renewal until it's weeks or a month away. The renewal process takes time, and starting early increases your chances of negotiating better terms.
Second, make sure your company has robust risk management procedures in place. For example, if your company engages subcontractors, make sure those subcontractors have their own insurance and that your company is named as an additional insured. Insurance companies will feel more comfortable insuring you if there are other potential sources of recovery in the event of a loss and your risk exposure is spread out.
Third, prepare for a more rigorous underwriting process by anticipating the questions you'll be asked. For example, does your company have an updated statement of values so insurers understand the magnitude of risk you're underwriting? What does your supply chain look like in terms of business interruption? Do you have a list of vendors you rely on to run your business? Having these materials ready in advance will make the underwriting process go smoother and show insurers that you've got your back.
Thank you for joining us, and we look forward to seeing you again in the next In the Know.