Insurance Trends to Watch in 2019 (article)
Insurance is one of the most valuable lines of defense for all businesses that want to protect their finances and ensure their ongoing success. And, as policyholders review their budgets and lines of coverage each year, they need to know how their insurance costs will impact their bottom lines.
Insurance experts often examine how outside influences and trends affect the property & casualty marketplace, and businesses should evaluate how these factors influence their insurance coverage.
Carriers will continue to focus on trends from the past few years, including large weather events, liability exposures and data breaches. However, there are a number of new market developments to consider:
Continued market surplus – Insurance carriers are still obtaining large amounts of excess capital, which has helped stabilize the market despite the growing number and severity of claims. Although this trend should continue in 2019, some experts worry that if large losses continue or other market conditions emerge, P&C carriers may not be able to rely on their reserved assets.
Delicate political climate – The Trump administration’s policies on trade, immigration, taxes and other issues have had a variety of effects on business. New trade deals have changed how organizations import materials and export products, and an extended government shutdown in the beginning of 2019 caused many federal agencies to pause their operations. This climate will likely remain in place for much of 2019, especially as public perception focuses primarily on affiliation with a political party.
Rising motor insurance rates – The growing U.S. economy has put a record number of drivers on the road and led to a rising number of auto claims. Commercial drivers and motor carriers will also continue to face rising demand for freight capacity and regulatory pressure. The Department of Transportation (DOT) has also indicated that it will examine potential changes to its hours-of-service regulations and Compliance, Safety, Accountability (CSA) program.
Changing perceptions on liability and harassment – The #MeToo movement and other social campaigns have highlighted workplace harassment, and businesses are being held to a higher standard for topics related to their employees’ actions and employment procedures. Because of this, many businesses will have increased liability exposures – even if they haven’t changed their operations and don’t have loss histories.
Region-specific weather risks – Carriers are closely examining how a business’s location and loss history affect the chances of future wind, flood and fire damage. Specifically, the catastrophic losses from the 2018 California wildfires are leading insurers to take a close risk at businesses along the Pacific coast and in other fire-prone areas. Underwriters are also looking at businesses with multiple rain and flood claims, especially those along the Gulf and Atlantic coasts.
Flood insurance updates – A short-term renewal of the National Flood Insurance Program (NFIP) was issued just before the start of 2019, but most experts agree that it needs extensive changes to remain a viable option for businesses and homeowners. Many legislatures have suggested the program needs to allow for private insurance options, limit payments to properties that flood repeatedly, create incentives for risk mitigation or improve flood mapping programs.
Business can also look forward to some positive trends in 2019:
Lower workers’ compensation rates – Many states announced lower workers’ compensation rates for 2019. Additionally, insurance carriers will continue to compete for business because of a decline in loss rates, lost-time claims and loss severity.
Opportunities for businesses with risk management plans – Businesses traditionally don’t want underwriters to look too carefully into their operations, but the increased level of scrutiny in 2019 may help organizations lower their insurance rates if they address their unique risk exposures.
Rising number of coverage options – Insurance carriers may limit a policy’s terms if it relates to substantial property or liability risks, but other marketplaces should offer more flexible coverage options. This is especially the case for cyber insurance, as carriers are starting to include coverage both in other types of policies and as a stand-alone package.
CBIZ Insurance Services, Inc. is here to help your organization find the coverage you need to protect your business. Please contact one of our dedicated insurance professionals today to discuss your insurance options.