Premiums should remain stable, perhaps begin to soften, in 2016. However, there are certain pressures we must consider. First, AM Best has re-calibrated the equation they use to determine if an insurance carrier has secured enough reinsurance. Certain carriers may be forced to secure additional reinsurance in order to retain their positive AM Best rankings. The effected carriers will need to pass along that cost to the insured. Thankfully, reinsurance costs are at historical lows – so impacts could be minimal.
Secondly, we are in an election year. Whoever takes the White House, how will their policies effect the insurance markets?
Lastly, we have the stock market. The increasing volatility could signal the emergence of a bear market. Financial companies appear to be leading this charge downward – at least when this post was drafted. Should the market cool substantially, the insurance carriers could lose investment income… which could force them to increase our premiums to make up for that loss. However, given the underwriting profits the carriers have appreciated over the past few years and the competition for market-share that exists presently on the street, premiums would likely remain level (depending on how low a bear market takes us, of course). Additionally, expect M&A activity to continue on both the carrier and agency-sides.
In all, 2016 will likely be a changeable year – especially in the 2nd half. We will stay on top of the carrier financial reporting and will continue to monitor the street. As the new curves in the market present themselves, we will make sure that our insured clients are prepared. Onward! -Scott H. Sutter, President of SRT
The past two winters have reminded us New Englanders how much snow can effect our businesses. Too much snow – property owners, residential associations, and municipalities blow through their snow removal budgets, hotels don’t fill beds, and restaurants have fewer customers. If the snow sticks around, golf courses can’t open, race tracks can’t host races, and amusement parks can’t welcome guests. On the opposite side of the spectrum, if New England has a mild winter, snow removal companies’ plow trucks stay parked. The Farmer’s Almanac suggests New England will see yet another snowy winter. Meanwhile, the balance of the forecasting community feel it’s too early to tell – as explained in this article on Philly.com.
If your business has been hindered by snow or the lack thereof, we have a solution. Strategic Risk Transfers can back-stop your budget’s exposure to weather-related losses through an insurance-derivative.
Other weather risk programs are available on the market – but beware. Since these products are insurance-derivatives, they are not regulated by your state’s insurance department. The program managers could literally take your money and run. We, however, only secure your coverage through a nationally recognized insurance carrier, whose regional offices are located in Simsbury, Connecticut.
Now is the time of year to consider a weather-risk program. Once November hits, it’s too late. If you are interested and would like to measure the economics, email SRT President Scott Sutter at firstname.lastname@example.org or at 508-304-6106.
NBC Connecticut recently featured SRT President, Scott Sutter, in an on-air interview. Scott was to compete in the 2015 Nutmeg Games and shared a little-known facet of his life with the event organizers – who invited Scott to share his story publicly. He agreed. “I am flattered by the storytelling of NBC-CT. The paralysis that I dealt with when I was younger is a story that I have rarely shared. J.W. Stewart did a wonderful job presenting the meaningfulness of the challenge I was able to overcome and I am endlessly thankful. My wish is that someone who really needs to hear this message sees this video, and it gives them hope.”
Reflecting on their data, The Hartford recently identified the Top-10 claims a small business would likely encounter. Considering our own data, we tend to agree with what The Hartford has discovered. Making the list at #10, is burglary & theft – which has been appearing with increasing regularity. This includes employee theft. We’ll be keeping an eye on this trend and will continue to work with our clients to identify their individual exposures, including their cyber liabilities. To see the full list, please click here: The Hartford Top-10 Small Biz Claims.
Premiums will continue to stabilize through 2015. Despite absorbing losses from heavy snows, Tropical Storm Irene and Hurricane Sandy, Northeast-focused insurance carriers are becoming more flexible with their renewal pricing. Stock market investment performance and stable reinsurance costs are certainly contributing factors. But it is competition that is keeping the hard market in check. In 2014, the larger, more diverse, or more disciplined carriers who were less effected were delivering smaller premium increases. To prevent a hemorrhage of market share, the regional carriers were forced to limit their increases. For 2015, unless a risk is located within 5-miles of the coast or has negative loss experience, thanks to this peer pressure, increases no longer appear imminent.
More good news… Several of our carriers are capitalizing on this market fluctuation. Beginning in late-2013, they reorganized their backrooms or spun off unprofitable branches of their operations. This produced savings. Those savings are being re-deployed as new underwriting programs and reduced rates. We began seeing the benefits of the carrier’s efforts in the 2nd half of 2014. In some cases we had to switch clients to a new carrier, but many saw level or decreased premiums at renewal. Several saw double digit premium decreases.
From my perspective, unless there is an event that will adversely effect all insurers across the board – like a stock market crash – the trend of moderation will continue… and could lead us into a softening market.
As always, we will continue to investigate options for each of our clients in advance of their renewal dates – to insulate them from premium hardening and to capture as much softening as possible. In the meantime, the spring thaw has arrived! We’ll feel the warm sun on our faces very soon! -Scott H. Sutter, President of SRT
As the name of the insurance implies, companies secure Directors & Officers Insurance – commonly referred to as D&O – to protect their execs and board of directors. It’s a wonderful safety net that could kick in to pay for defense costs and/or monetary awards, should the board be sued by one of its membership. However, like any insurance policy, it comes with its own set of coverage limitations and exclusions. Some of these limitations and exclusions are well known because they are easy to spot – Employment Related Practices Liability, for example. Then there are the ones that lurk quietly and unannounced, because they are hard to see – like a shark in dark waters. One of them, is the Failure to Insure Clause.
After being in the insurance business for more than 15-years, I’ve come to conclude that agents rarely, if ever, point out this dangerous pitfall to their clients. I, however, am quick to address it – because I see it as a valuable tool. The exclusion is an incentive for the board to weigh their insurance coverage. When the directors consider altering their insurance, I always point them back to the contracts, Master Deeds, and By-Laws that largely spell out their responsibilities regarding insurance. If the responsibilities and the actual insurance doesn’t marry up – I remind them of the Failure to Insure exclusion.
In regards to contracts, Master Deeds, By-Laws, etc… They are legal documents. Therefore, it is only appropriate for an attorney specializing in such law to interpret them. Not insurance agents. Not bankers or CPAs. Attorneys. Only. This is why at SRT, when we bring on a new client, we immediately engage the client’s lawyer. If interpretations of the governing documents have not been made to determine the insurance responsibilities, we work with their attorney to make that happen. In the end, everyone is better protected, because we all understand where our responsibilities begin and end – effectively minimizing our exposure to the Failure to Insure pitfall.
A New Cross Country Course in Somers, Connecticut
The last of the twenty-four hand painted posts that mark the new cross country course at Field Road Park in Somers was set into place just 30-minutes before its first use – the Somers High School Cross Country Team’s only home meet of the year. Scott Sutter, the President of Strategic Risk, spearheaded the fundraising and installation of the project.
SRT Sponsors 15th Annual Somers Great Escape
Nearly 400-runners participated in this year’s Somers Great Escape – which is a true destination race. Immediately after the race, the 4-Town Parade kicks off, officially opening the 4-Town Fair… drawing tens of thousands of people to the quiet horse and tobacco farm town of Somers, Connecticut. This year, the race itself raised over $8,000 for the Somers Educational Foundation – a privately funded grant, that provides scholarships and classroom supplies for the Somers Public Schools. More info on the SEF can be found on their webiste: www.sefonline.org. More info on the race can be found on their website: www.SomersGreatEscape.com
The second annual Somers Summer 5k Series, hosted by SRT President, Scott Sutter, raised over $1,700 this summer. All of the race proceeds will go towards installing a new and permanent cross country course for the Somers Connecticut Middle and High School Cross Country Teams.