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Indian River County Board of County Commissioners 0 * Gallagher <br />'4PCORE 360' <br />Executive Summary <br />We are very pleased to present Indian River County BOCC with a comprehensive property and casualty <br />insurance proposal effective May 1, 2022 – May 1, 2023. This executive summary provides a high-level <br />overview of our renewal accomplishments and alternatives for consideration. It is broken into the <br />following components: <br />• Marketplace Analysis – current insurance industry conditions <br />• Property Program Analysis <br />• Casualty Program Renewal <br />Winter Insurance Market Report — February 2022 <br />The big picture <br />Where we were: 2021 <br />Like 2019 and 2020, 2021 was a challenging market overall. Our clients faced significant difficulties <br />trying to find coverage, with capacity issues and significant rate increases—for some clients as much <br />as 50%-100% increases, often multiple years in a row. <br />• A confluence of factors continued to challenge the industry, including social inflation—the trend of <br />rising insurance costs as a result of increased litigation, plaintiff -friendly judgements and high jury <br />awards — increased storm activity and pandemic losses. Additionally, carriers' ability to offset these <br />results through investment income remained a challenge due to the low interest rate environment. <br />Where we are: What we're seeing now <br />• Rate increases are moderating for some lines. After three years of substantial rate increases, we're <br />approaching a point of rate adequacy in the market, which is leading to more moderate rate increases. <br />• The market is trending slightly flatter, though not in every coverage line. Cyber, for example, has kept <br />up sizeable year -over -year rate increases, with median increases of 39%, while Workers' <br />Compensation rates were flat. <br />• Three years of carriers raising rates, restricting limits and increasing deductibles have generally made <br />the market more attractive to new business. Carriers' combined ratios improved throughout 2021. <br />Where we're going: Trends we are watching <br />• With improving rate adequacy comes increased carrier competition. There are a number of new <br />entrants to the market and increasing competition as underwriters look to write new business. We <br />expect this to level off rate increases further into 2022. Exceptions are challenged placements, those <br />with elevated risk profiles, and accounts that have experienced losses. <br />• Pandemic concerns about how COVID-19 will impact the industry both from a loss and exposure <br />standpoint is starting to ebb, but some uncertainty remains. <br />• Social inflation remains a concern, with a particular impact on Commercial Auto, General Liability, <br />Errors and Omissions, and Umbrella/Excess insurance. This trend continues to drive rates up, albeit <br />more moderately than in prior years. <br />• Modest rate reductions may be <br />out to market in years. <br />