10 Things to Know About Commercial Property

1. Commercial property insurance continues to be a buyer’s market with additional capacity still making its way into an already overcrowded space. In the current market it is important for the insureds to set goals prior to renewal. Clients should consider whether the goal is to take advantage of all of the most aggressively priced capacity and maximize savings or strike a blend of premium savings and improving terms and conditions. —David Finnis, head of Property Broking, Willis North America
2. Another consideration is reviewing where the current property average rate stands in relation to the past 10-15 years. If the current rate is toward or at the lowest point, then some thought should be given to locking it in for the next three years. It might be possible to couch the bet on future years and have underwriters agree to year 2 at -5% and year 3 at -5%. —David Finnis, head of Property Broking, Willis North America
3. Depending on market segment, loss history and catastrophe exposure, most commercial property insurance clients around the country saw rate decreases in 2015, some as high as -20%. —Thomas Delark, chief marketing officer, HUB International Northeast
4. Accurate and quality underwriting data will further enhance renewal outcomes. Modeling (RMS/AIR/Blended) will continue to affect capacity and pricing guidelines. By having the most comprehensive data (including secondary modifiers), insureds will better understand their true risk profile along with achieving positive renewal outcomes. —Stephen Zimmer, National Property Practice leader, Wells Fargo Insurance Services USA
5. From a cost of capital perspective, catastrophic property pricing may be getting near a floor when contemplating required returns and carrier expenses. While there remains an abundance of capacity, the models along with these capital requirements may slow some of the decreases in that arena. —Stephen Zimmer, National Property Practice leader, Wells Fargo Insurance Services USA
6. Commercial property insurers are looking for opportunities to maintain their positions on accounts. They are also interested in product innovations to create opportunities to find new premiums in the market. The marketplace is seeing multi-year aggregate products emerging. —Mike Andler, head of U.S. property risk, Lockton
7. With the lack of catastrophic events such as hurricanes making landfall in the U.S. or large quakes in California, insurers have maintained underwriting profit in spite of the competitive pricing environment. —Michael Korn, Property Practice leader, Integro
8. Contingent business interruption continues to be one of the most scrutinized property exposures. Continued consolidation of suppliers by manufacturers puts more eggs in fewer baskets and underwriters struggle to identify the extent to which multiple insureds can be exposed. This can result in restrictive coverage and/or capacity. Providing as much detail as possible relative to suppliers and alternative sources is key to maximizing available coverage. —Michael Korn, Property Practice leader, Integro
9. Flood coverage will continue to be a growing exposure and concern for insureds and insurers. With weather patterns changing, the world is seeing more flooding in areas that have been known to be exposed, as well as new geographies that previously did not represent flood exposures. The improvements in flood modeling have aided in the identification and quantification of flood risks, which in many cases has led to exclusionary language. —Michael Korn, Property Practice leader, Integro
10. There were roughly 100,500 non-residential structure fires in the U.S. in 2013, causing 70 civilian deaths, 1,500 injuries and $2.6 billion in direct property damages. —National Fire Protection Association