Part II: Don’t Go Bare: 4 Creative Options for Brokers in Gulf Coast States

This post is part of a series sponsored by IAT Insurance Group.

It’s not news that property owners along the Gulf Coast are experiencing sticker shock when it comes their insurance renewal. The challenge is, rate increases of 30%-40% industry wide have some wondering whether carrying property insurance at all is worth the price.

From double year-over-year increases in Florida to average global insured losses from natural disasters reaching $100 billion or more per year, every year, since 2017,^[1] this new normal is one of the hardest markets the industry has ever seen.

A growing number of building owners and operators are “going bare,” electing not to have coverage at all. In fact, it’s estimated that 13% of current Florida homeowners carry no property insurance — almost double the 7% nationwide rate.^[2]

To move property owners away from going bare and to lean into the hard market, there are a few ways brokers can help insureds find creative solutions to this challenge.

Even in a hard market, savvy brokers can pull together programs for clients in need, albeit often without all the bells and whistles of yesterday. Here are four creative solutions brokers can offer their insureds to remain covered — and avoid going bare.

For example, a 25-year-old building may cost $500,000 to replace, but through depreciation it may be worth only $250,000. Suggesting ACV coverage provides an adequate, respectable option that covers the depreciated value of the building, rather than pricing based on the dramatically rising costs of replacement.

In this hard market, there is an opportunity for brokers in the Gulf States to build new relationships with markets and new property owners, while sustaining existing ones. To do so, creative thinking is critical to identifying affordable solutions and pulling together a program for businesses in need. This can open up brokers to new retail agencies, new lines of business — and new relationships — that can potentially open even more doors down the line. For more information, see Part I of this blog: Navigating the Hard Market: 4 Strategies for Brokers to Contend with Constraints in Gulf Coast States Property Insurance

Have a question on how to mitigate risk? Email losscontroldirect@iatinsurance.com for a chance to see your question answered in a future blog.

By Ben McDonald, Lisa Thomas and Samantha Nodzak

[1] Swiss Re Group “The State of the Reinsurance Property Catastrophe market,” May 16, 2023.

[2] TampaBayTimes.com, “With Florida’s high property insurance rates, many are forced to ‘go bare,'” December 13, 2022.