The Hardest Market in Nearly 20 Years
For those of you that have been following along and reading our newsletters this past year, you know it’s no secret we’re in the midst of possibly the worst insurance market any of us can remember. We’ve been in it long enough now that everyone has gone through a renewal cycle that is reflective of the “new normal.” Whether it is rate increases, limit reductions, increased deductibles, stricter training requirements, or all of the above, everyone has felt the pinch in some capacity. In fact, it’s gotten to the point that in certain cases manufacturers have reached out to us for assistance because they are seeing deals vaporize due to the prospective buyer not being able to secure acceptable insurance terms! Those are the extreme cases, but they’re not as uncommon as they once were. So, what is driving all of this you ask? Consider this excerpt from an AJ Gallagher piece from two months ago. I mention the time of publishing only to highlight that the figures contained are already underreported as of the time of this newsletter.
“The aviation market has absorbed a combined $1.4B in airline hull and liability losses in the year to date, according to estimates. The broker said 2019 was ‘firmly on track’ to become one of the costliest loss years in aviation history, with three months left to go. In 2018, the aviation market took a combined $1.6B in claims. Commenting on aerospace losses in particular, which include the worldwide grounding of the Boeing 737 Max, AJG said it was ‘highly likely to assume that whatever the final quantum of losses, it will be sufficient to wipe out substantial portions of the annual aerospace premium across a number of years, potentially impacting some reinsurance programs.’ The general market consensus is that aviation insurers will continue to look for rate improvements and are already factoring rate increases into their 2020 business plan.”
The good news is that we’ve been out in front of this since we saw it coming over a year ago. We continue to source every possible avenue for each and every client due to the volatility we are seeing. It’s in the best interests of everyone, markets included, that a fresh look is taken at every policy renewal. To that end, it’s more vital than ever that policy holders provide as much detail in the days/weeks leading up to their renewal. The slightest differences, assumptions, or inconsistencies could have a substantial impact.