Meta Description: It is time to consider property premium volatility into the year’s budget. Things are different now, and the property market is solidifying. The following will give you a fair idea about the history, making & solutions of the hardening property market.

The International Risk Management Institute (IRMI) states that a challenging market is “the improvement in a market cycle when the capacity for most types of insurance decreases & premiums increase.


With the pandemic playing its game, say bye to the soft, buyer-friendly property market, we are facing a quick clot in the market. The epidemic arrives when the Property & Casualty insurance policy industry is already losing lump sum, unlike life insurance policies. 

Rates pursue to swell, with more massive raises up to 50% for wood-frame projects & smaller increases for commercial non-combustible projects. Wood-frame capacity is severely limited. Also, consider an augment in your security in these challenging times as a result of arson. Developers must heed their general contractor’s site controls, loss history, experience & financial condition. It is a little early to tell what impact the COVID-19 would have on the property industry; we expect many reinsurers & insurers to be forced to increase equity raising efforts and cancel or delay dividends.


As the market stiffens, bearers showcase a lessened desire for growth while placing more cutbacks on underwriting eligibility criteria. We must pivot on redressing adverse loss ratios that were advanced during the soft market. As a result, property capacity decreases, property rates increase, and the aggregate carriers that play a part in the market decrease. Recent reports by Fitch Ratings & AM Best authenticate the strength of the Surplus & Excess Lines market.


It is crucial to fabricate strong working relationships with your underwriters & brokers. The aim is to make sure all your parties are aware of the risk linked with your property. Also, make sure to utilize the most acceptable MO to insure against feasible preventive or loss measures to put in place. Consider yourself part of the team and let your goals & efforts be transparent. A strong line of communication always goes a long way. It enables you to raise a better understanding of the times to come in the market, which in turn lets you plan better.


It’s inflexible to foretell the repeated timing of market softening & hardening. According to forecasts, the property tagged as Non-CAT with a good loss history is expected to see an upwards 20% increase in premium payments rates.  Bi-annual or quarterly assessments can assist in pinpointing changes or trends in the market. This attempt is often led by the risk & finance team. Over 2017, the excess & surplus market nearly doubled its pace of premium growth in 2018, according to AM Best. With a premium growth of 15%, Fitch confirms the market’s continued strength in the first half of 2019; a rate nearly doubles the overall Property & Casualty market’s growth rate.


When an organization receives its renewal premium invoice, organizations will generally look to re-examine their limits to reduce costs. Alas, this isn't the wisest decision if you haven't conducted a thorough analysis. Determining your limits would involve a perception of the organization's short-term & long-term strategies, reassessing asset values & calculating the probable maximum loss. With the market growing harder, organizations will feel the collision on their income statements.

Premium or deductible multiples are occurring, but those typically involve the following types of businesses:

  • Multi-family.
  • Hospitality (CAT-driven)
  • Recyclers, Foundries & Smelting 


Additionally, carriers are increasingly more discerning about their partners, looking to wholesalers and MGUs that specialize in certain niche areas for underwriting profitability. Insurers want better business from their distribution system and both carriers. And retailers are looking for improved operating processes to facilitate the placement of business – again, key areas that distinguish wholesalers and MGUs in the market. With the property market in a state of transition, carriers tighten conditions & terms. Here are a few actions that were taken by carriers amidst this hardening period -

Increasing deductibles & premiums: In the main concerning hail & water damage claims.

Reducing their capacity or limits: For the most catastrophe (CAT) exposed real estate planning.

Inspecting properties located in or near wildfire areas: charging premium increases & extraordinary rate.

Examining the adequacy of building replacement values or costs.

Limiting interest in residential exposures, particularly wood frame construction.

The growth in the Excess & Surplus market is in part due to the hardening market, including in the commercial property insurance sector. Fitch anticipates that further premium rate movement & hardening of underwriting exposures toward non-admitted markets will support above-average excess & surplus market premium growth in the near term.


Property markets are meeting record-breaking CAT losses and “insured to value” shortfalls that produce a lack of deterioration of terms, capacity, and an unprecedented increase in pricing. Today, numerous real estate owners are operating with financially strapped tenants who cannot pay rent. Property owners & managers also worry that many companies will pursue to allow their employees to work from home. Let’s look into the past for a better understanding of our future.

There is a resemblance between the industry crisis of the 1980s & the commercial real estate market conditions of 2020. Besides, some larger players have limited their retrenched/restricted capacity deployment, restricted insurance coverage terms & appetite on certain risks due to severe catastrophe losses, which is also driving more business to E&S carriers. Nearly every business, in some fashion, is faced with the risk to build cash excessively & make financial decisions today that they have not experienced for decades. Rate increases across all lines of coverage are becoming the norm, except for workers’ compensation.


RPS, as a national wholesaler and specialty insurance distributor, brings value to insurers, agents, and broker partners. RPS has invested many resources to eliminate the headaches agents, and brokers often experience with insurance placement. They’re renowned for placing unique & complicated risks – even for the most challenging clients. Creativity & Innovation in the exclusive programs has developed the platforms built to facilitate the auto insurance quote-bind-issue process. Bringing exceptional knowledge and expertise in specialized niches and products and expansive market access to a certain amount of coverage in today’s P&C market. It’s important to note that this market cycle, which is now seeing higher rates, is not like previous hard market cycles (1986 or 2002-2003, 2005-2006). In those, premiums are paid doubled for some insured and soared even more elevated for others. Markets are cyclical, and while a challenging market is always looming, it matters how decision-makers respond and prepare for it. Yet we are experiencing a price correction, tighter underwriting guidelines, and increased risk selection on the part of carriers to protect their bottom lines.

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