There are very interesting trends developing in 2010.  One of the interesting scenarios involving insurance carriers face is that they have components items that fluctuate significantly.  An insurance carrier has many unpredictable variables that range from hurricanes affecting reinsurance premiums to income generated from investments.  Clearly, most large businesses have similar concerns generated from different types exposures.

Attempting to understand underwriting philosophy of insurance carriers is next to impossible.  When rates increased by 100% plus for coastal insureds after 2004/2010 hurricane seasons, rates declined very quickly starting in 2007 and onward as competition ensued for the exorbitant premium opportunities.  In 2010, rates are below where they were before the storms in 2004/2010 even though the economy is much worse shape and investment income has been severely affected.  Although reinsurance premiums are down from historical levels reinsurance is still a major cost to carriers and there seems to be little justification for the current softening of the market.  That being said, OUR CLIENTS LOVE THE SOFTNESS AND WE SUPPORT IT!!!!  This explanation just shows how unpredictable rates can be and how short of a memory the insurance market has. 

Rate softness continues around the country.  State programs like Citizens in FL have been established to minimize the impact to many by competing with the private sector for business.  While this practice faces much controversy, the development of state funds have created a safe situation for insureds that would otherwise face premiums too high to run their business.  Severe competition for marketshare has established rates pre-1990 in many areas for many real estate owners.  This may not be the case in the most hurricane prone regions, but it is certainly the case in inland areas. 

As discussed above, predicting the future of insurance rates is really not possible.  We do hear undertones of possible tightening for some of the inland areas; however, nothing crazy like a few years back in hurricane areas.  The simple reason is that the rates are so low that claims activity that normally happens crushes a carriers actuary basis for operational profitability due to claims expense and reinsurance purchasing power.   We’ll see if the overwhelming interest in marketshare (i.e. premium income) is enough to overshadow the potential losses in the very near term!  Coastal areas are likely to see a continued softness in the near term…very welcomed news!!!

Our firm has been able to pick up a number of new clients due to specialty programs available to us. If we can help you or anyone you know just by chatting on the phone to determine their current position, please give us a call.

Your Multi-Family Property Insurance Contacts: Rob Stephenson & Jeremy Burr
Rob Stephenson: 407-925-0932; rob.stephenson@insuredapartments.com
Jeremy Burr: 800-243-6899 ext. 15427; jeremy.burr@insuredapartments.com