Brier Grieves February 18, 2016 No Comments

The Insurance Pricing Cycle

Most industries are cyclical to some extent, and insurance is no exception. As an insurance buyer, it’s important to know what factors determine the cost of coverage. But understanding the market cycle is only half of the pricing equation; since you can’t control the market, it’s equally important to know what you can do to ensure you are always securing the best price– whatever market conditions prevail.

Property and Casualty Insurance Cycle

The insurance industry pricing cycle alternates between periods of soft and hard market conditions. In a hard market, coverage is harder to place and premiums grow. A soft market indicates premiums are stable or falling, and insurance may be more readily available.

A variety of factors influence the price of insurance, including economic downturns, catastrophic events, insurers’ claim reserve dollars, and supply and demand. Supply is tied to the amount of policyholder surplus in the industry, and demand is the appetite of the insurance-buying community to transfer risk.

Pricing cycles can also vary between lines of coverage and geographic location, creating both hard and soft market conditions depending on what type of commercial insurance is involved and how exposures to loss have changed. For example, the pricing and underwriting approach for property coverage for businesses based in hurricane-prone areas is much different than for businesses located elsewhere.

Risk Management Considerations

Buyers can take steps to ensure they are always getting the best price. Although premiums vary due to market pressure, your true cost of price is determined by your claims history. The key to controlling price is to control losses through instituting safety prevention programs, managing claims efficiently when you have a loss and employing cost containment strategies.

Brier Grieves Agency has the resources to help you employ cost reduction strategies to limit exposures and reduce premiums through both risk transfer and non-risk transfer solutions. Our consultative approach includes the following steps:

  • Identifying your exposures to loss
  • Recommending loss control solutions
  • Improving your disaster response potential by helping you to create or update a business contingency program
  • Assisting in building a culture of safety
  • Providing claims management to keep costs down
  • Seeking continuous improvement
  • Reviewing and recommending coverages to ensure your protection

Those who approach risk financing through sustained long-term cost control and claims management measures, instead of just riding the insurance pricing cycle’s wave, are always in a better position to secure coverage at the best price.

The market may fluctuate, but our goal–to be your broker of choice–never wavers. To review your risk management strategies, contact us today at (813) 876-4166.

How Well Do You Know Your Flood Insurance?

There have been many changes to flood insurance in the past 2 years. Some more were just instituted last month. Have you kept up to date to see if you will be affected when its time to renew? As of April 1st, 2015 new changes were made to flood insurance where for some this will result in lower rates and more affordable insurance, for others though, the cost will be going up. These are important changes to know for your current insurance and new insurance if you are looking to purchase a new home that may be in a flood zone. If you are buying a new home check this list for some questions you should ask before making your final decision. 

If you do not live in an area that is considered a flood zone you are not required (in most cases) to obtain flood insurance. This is never recommended though. At any time a pipe could burst and cause massive destruction to your home. Most people are not aware that your homeowners insurance policy does not include damages caused by flooding. This is a separate policy you need to obtain. If you are not in a flood zone your policy will most likely not be very costly, the destruction caused by water damage is.

How you reviewed your policies lately? We encourage you to do so. If you have any questions please call us at 813.876.4166

Also, check out this quiz and test your flood insurance knowledge. Post your answers in the comments to be entered in our summer drawing.

 

  1. Is the SFHDF mandatory for all real estate-related loans?
  2. If the SFHDF form shows the property is not in a flood zone but the map indicates it is in a flood zone, which controls?
  3. Can a lender waive flood insurance on a piece of property?
  4. What happens if a lender disagrees with FEMA about a property?
  5. When is a loan considered “made” for flood insurance purposes?
  6. What evidence of coverage does a bank need to have at closing?
  7. How long does proof of coverage have to be maintained?
  8. What rules apply to second mortgage loans?
  9. Do the same rules apply for business and construction loans?
  10. Do the new Consumer Protection regulations that became effective october 1, 2001 apply to flood insurance?

 

 

 

Flood Insurance Changes as of April 1, 2015

There are cost changes coming into effect on April 1, 2015 to flood insurance. For some this will result in lower rates and more affordable insurance, for others though, the cost will be going up. The Federal Emergency Management Agency (FEMA) will be implementing more changes to the National Flood Insurance Program (NFIP) as directed by the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) and Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters).

Older homes that are not your primary residence are going to be subjected to the highest increase. The lower, subsidized rates that previously applied to these properties are being phased out and homeowners will be looking at a cost in crease of 25% plus a surcharge. The changes will also bring lower initial rates for properties that are now considered high risk due to changes in FEMA flood maps. This will last for 12 months after the changes to the maps are made and then will gradually increase to reach their full risk rate.

Some of the important Flood Insurance changes take effect in April as the result of the Homeowner Flood Insurance Affordability Act (HFIAA) and the Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters):

  • Implementation of the annual surcharges that are required by the are HFIAA
  • Increasing the reserve fund assessments required by Biggert-Waters
  • Guidance on substantially damaged and substantially improved structures and additions rating guidance on Pre-Flood Insurance Rate Map (FIRM) structures
  • Implementation of the annual surcharges required by HFIAA
  • New deductible options
  • Implementation of a new procedure for Properties Newly Mapped into the Special Flood Hazard Area and existing Preferred Risk Policy Eligibility Extension (PRP) policies
  • Implementation of the first annual rate change that sets rates using rate increase limitations set by HFIAA, for individual premiums and rate classes

Federal Policy Fee (FPF) Changes

Make sure you complete and return the residency forms from your insurance company/agent, as your responses (or lack thereof) will impact your renewal rate.

If you have any questions about your current policy and what changes you may incur please call us at 813.876.4166 and one of our specialists will be on the line to help you.

To learn more about Flood Insurance you can read in detail at I Got Dropped.

Keep Your Insurance In Check for 2015

It becomes very easy to become comfortable with the insurance company you have and just continue to renew and not bother reviewing your policy to see if you can save money and get better coverage. We have a few tips that will help you have the best coverage for all of your policies for the least out of your pocket to make 2015 a great year for you insurance wise!

  1. Always pay on time: If you do not pay your premiums on time you face cancellation or your policy lapsing. This can result in paying higher rates to reinstate and also if you have an incident in the time period where it lapsed, you may not be covered, even if you have been with the company for years.
  2. Review your policies yearly: Laws and limits change yearly so it is good practice to review your policy every 6-12 months to make sure you have enough coverage and also to be sure you are not over paying for things you do not need.
  3. Do not make constant claims: Remember any damage lower than your deductible comes out of your pocket. So try to only report things that really are major. If the claim is only slightly higher than your deductible the rate increase could end up costing you more in the long rung
  4. Remove your ex if you have one: If you are divorced or had your partner as your beneficiary remove them if you don’t want assets to go to them. Designate a new person. If you do not have a will or beneficiary your assets could go to the government. It is important to have this setup properly.
  5. Be-careful loaning out your carWhen you loan out your care you are not just loaning your property, you are loaning your insurance. If the person you lend your car to gets in an accident you are liable and it goes on your record and your rates.
  6. Have healthcare: With the new laws you must have health insurance by a certain date (unless you qualify for an extension) or you will get penalized. Be sure to sign up and have all of your dependents insured as well.
  7. Don’t drink and drive! Period!: For the first reason its dangerous. Besides that though, the insurance ramifications can and will be a total nightmare. Your rates will increase significantly. Depending on the state you live in and how many offenses you have you may be required to have a breathalyzer installed in your car, which if you lease will be another nightmare. The fines can last for years and be costly, not to mention possible jail time, lawyer fees and long-term loss of license.
  8. Add your new child: You must add your child within 30 days of birth or face penalties and the possibility of no insurance.
  9. Alert your insurance company of new car: Most insurance companies will offer a short time of coverage for a new car. You should call within one week to let your insurance company know of your new car. In some cases depending on the car you will save money too. Don’t hesitate, call!
  10. Create a  home inventory: It is good practice to have a detailed home inventory for claims. The easiest way to do this is go room by room, take photos, add details and save any invoices or receipts you have. This will make filing your claim and being properly reimbursed much easier.

 What You Need to Know About Ridesharing Coverage

As ridesharing becomes more popular as an alternative means of transportation, insures are finding themselves in a rock and a hard place. Some have been hesitant to offer polices.

According to Mark Maucere, senior vice president for AmWins Transportation Underwriters Inc. in the Indianapolis office, “Our rate for transportation classes is based on a point A to point B mechanism and the problem with these operations is we don’t know when the car is out or in the garage, we don’t know the experience of the driver, car maintenance or in what other ways it is used.”.

Rideshare services operate differently than traditional taxi and limousine services so fall under different categories for insurance coverage. There are many questions about whether or not passengers, drivers and even innocent bystanders would be covered in the event of a crash under this program.

These programs are more cost effective for consumers than taxi services. Most of the ridesharing companies use phone apps to connect drivers and paying customers.

“It’s a really interesting idea for a business because they’re using the internet and mobile apps to create a more efficient experience,” says John J. Fischesser II, an attorney withthe Pitzer Snodgrass firm in St. Louis.

There really is no black-and-white answer to most questions people have about ridesharing insurance. It varies greatly from company to company and state to state. If you are considering getting into this business, or using their services, it is best to contact the insurance company affiliated with the car and driver and find out what their current coverage is.