We are halfway through 2022 and prices are going up everywhere. Gas prices have skyrocketed over the last 3 months and inflation is currently sitting at 9,1%, the highest increase since 1981. So how is this going to impact insurance rates?
Through the first quarter of 2022, commercial property rates have seen an average increase of 7.6%. These rate changes are related to cost increases in construction repair costs, supply chain disruption, an increase in premiums in reinsurance markets, and the growing frequency and severity of natural disasters over the last 24 months.
Developing Issues and Trends to Watch
This year is expected to be a potentially dangerous year for hurricanes and wildfires. We have already seen significant wildfires with over 2.6 million acres burned and some research anticipates 20+ tropical storms in 2022. These increases in natural disasters have a significant impact on reinsurance markets.
Another growing issue in 2022 has been supply chain disruptions that have carried over from the COVID-19 pandemic. Shortages in building materials such as wood and metal along with shortages in construction-related labor have pushed construction costs and property values upward. These increases have led to more severe claims and issues of undervalued buildings.
Action Steps for Insurance Buyers
- Conduct a detailed inspection of your commercial properties and the surrounding areas for risk management concerns
- Review your current limits of insurance on all commercial property
- Develop a Disaster Plan / Business Continuity Plan to prepare your organization to remain operational in the event of natural disaster or major business interuption
If you need assistance with any of these action steps you can reach out to the team at The Crain Group at service@thecraingroup.com for further instruction.
