Insurance Property Market Continues to Harden

August 15, 2019

The insurance market continues to be difficult and volatile for not only egg producers but agriculture in general. It is difficult to predict from month to month or even week to week what Lloyd’s Underwriters, standard markets like Nationwide Agribusiness, or domestic excess and surplus markets will do on a renewal.

Lloyd’s Underwriters has been experiencing increases in their reinsurance rates and are passing those increases along to consumers. Nationwide has instituted $5M or $10M loss limits for egg operations.

Other domestic property insurers such as AIG and FM Global have pulled back on capacity due to loss experience, forcing many ‘less risky’ businesses to approach the Lloyd’s market. These more attractive risks are flooding Lloyd’s, stealing capacity from Lloyd’s typical customer base (such as agricultural risks) or forcing rate increases.

For example, if an office complex, formerly insured by a standard domestic insurer, pursues coverage in the London market, this sprinklered, well-protected suburban office complex would enjoy more competitive rates than a frame, un-sprinklered layer barn, dependent on a volunteer fire department, with no immediately available water source. Worse case, underwriters may choose to insure the office complex and decline the barn, regardless of rate.

In addition, a handful of domestic excess property markets recently suffered an egg loss (outside of the UEP program). As a result, these carriers have increased their rates and reduced their capacity for egg producers and other ag risks. The recent fire at a Tyson beef processing facility in Kansas will not help.

Thankfully, Palomar has committed carrier relationships with capacity for UEP accounts.

While market forces are difficult to control, all UEP members, whether insured through the UEP program or not, can help improve the future insurance market outlook:  prioritize loss control, use housekeeping practices, fire and wind resistive construction practices to improve the overall position, separation between buildings, firewalls, and consistent identification and removal of ignition sources.

Palomar now offers xRisk to policyholders, a new risk management mobile platform to help manage loss control activities and mitigate controllable exposures. Please contact the Palomar team to discuss the current insurance market, schedule an insurance review, or learn more about xRisk.