Chubb took a long look at commercial insurance rates and why they have seen significant growth over the last few years. The company’s report said rates rose 12% in the third quarter year-over-year between 2020 and 2021.
Catastrophes, supply chain meltdowns and inflation are pushing rates.
This information comes from Westchester. It’s Chubb’s wholesale excess and surplus lines division. The report said natural catastrophes are inflating the price of building materials and are adding to the cost of labor. That’s making claims more expensive which is also helping rates to rise.
One of the bigger problems facing insurers is property being undervalued. Commercial properties — Westchester said — were undervalued for underwriting purposes last year by more than 30%.
The report said those issues are not only driving rates higher but they are making underwriting much more difficult.
Westchester’s report also suggested a solution. Instead of undervaluing properties for insurance price purposes, underwriters, risk managers and property owners ought to find ways to come up with agreements with contractors to set a price for rebuilding before a catastrophe happens.
Scott Meyer is Westchester’s president and he looked a the report and suggests actually pricing property for the new normal.
“The insurance industry benefits from having a long history of dealing successfully with a variety of property exposures,” Meyer said. “While the confluence of the three risk factors described in this paper presents unique challenges, our industry is well positioned to handle them effectively and in a holistic manner. Thus, the time is now for a modernized and better-informed approach to successfully manage these issues for the benefit of all parties involved, including agents and brokers.”
Source link: PropertyCasualty360.com — https://bit.ly/3rpW8v3
