Property Insurance Rates Expected to Increase as a Result of 2017 Hurricanes

Over the past few years, most commercial insurance rates have remained flat or decreased because of strong competition between insurance carriers. However, the significant damage caused by Hurricanes Harvey, Irma and Maria in 2017 will likely cause many carriers to raise property insurance rates in 2018 for some policyholders.

Although most businesses aren’t exposed to risks from hurricanes or other catastrophic weather events, experts believe that many property insurance rates will increase as insurance carriers attempt to recover any losses from 2017.

Although most businesses aren’t exposed to risks from hurricanes or other catastrophic weather events, experts believe that many property insurance rates will increase as insurance carriers attempt to recover any losses they experienced in 2017. Businesses that are located in coastal areas or have significant flood risks will likely see the highest increases, while businesses with good loss histories and strong risk mitigation procedures may not experience any rate increases.

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Here are some other ways that the 2017 hurricanes may affect commercial insurance:

  • Experts don’t expect property rate increases to affect other lines of insurance. However, carriers that experienced significant losses or relied heavily on reinsurance may raise their rates.
  • Business interruption coverage was an important topic as many workplaces closed their doors in the aftermath of the 2017 hurricanes. As a result, underwriters will carefully examine the interruption exposures of both individual businesses and their vendors when determining rates in 2018.
  • Insured losses from the 2017 hurricanes and other catastrophic weather events have been estimated at $100 billion or more. However, experts believe that property insurance remains profitable overall, and rate increases shouldn’t be an indicator of a long-term hardening market.

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The National Flood Insurance Program (NFIP) was recently extended until March 23, 2018, as Congress considers long-term reforms to the program. Here are some changes that are being considered:

  • Easier access to private flood insurance to help expand the market and relieve pressure on the NFIP.

  • Higher rates for frequently flooded properties, the NFIP’s biggest expense.

  • New flood maps to account for changing flood risks.

  • Financial incentives for properties that address their flood risks.

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