04/12/2022 (2) - Laserfiche WebLink

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Indian River County Board of County Commissioners Where we are: What we're seeing now FM Global published an overall average annual inflation index (January 2022 v January 2021) of approximately 18% for real property and roughly 7% for machinery & equipment as well as approximately 30% for some specialty engineering equipment. The cost and availability of materials, increased labor costs and sparse contractor availability are driving up higher replacement costs. • There is rising carrier competition in the marketplace, with carriers looking to write new business now that rates have risen for three consecutive years. • There are still challenging renewals out there, especially challenging occupancies, lack of third -party engineering reports, and catastrophe -exposed businesses. • 2021 was a very active year in climate -driven claims, including winter storm Uri in February, which many meteorologists claim was a one -in -1,000 -year event. • Gallagher •• CORE 360' Q4 2021 Property Rate Changes Gallagher – U.S. Clients 0 Decrease 0 Flat increase • Hurricane Ida, which made landfall in August, caused significant damage in the Southeast and Northeastern United States. Carriers are now looking at $25 to $35 billion in insured losses in 8.8% Louisiana and other affected areas.' median rate change in Q4 2021* • The median increase for Property policies was 8.8% in Q4 2021, with 83% taking an increase. • While the median rate of increase has not changed dramatically since Q3 2020 (10%), the rate increases for the top 25% of companies dropped from 19.9% in Q3 2020 to 16.0% as of Q4 2021 (up slightly from Q3 2021). Where we're going: Trends we are watching • Companies with challenging occupancies, loss activity and/or CAT -exposed can expect to see rate increases in the higher quartile. • There are continued changes globally in the frequency and severity of perils such as tropical storms, wildfires and floods. In addition, we continue to watch some of the less well -modeled and non -modeled causes of loss, such as COVID-19. • Third -party valuations are increasingly useful (and oftentimes required) to ensure adequate valuations. Huge discrepancies between current insured values and the actual replacement cost at time of loss may exist for companies that have not had a third -party valuation of their buildings and contents, such as machinery, equipment or stock in a few years—or sometimes ever. Insured values, without an updated valuation, typically roll over year to year, with an arbitrary inflation factor applied to them. ' hftps://www.rms.com/newsroom/press-releases/Dress-detail/2021-09-06/rms-estimates-us25-35-billion-in-onshore- and-offshoreinsured- losses-in-the-gulf-of-mexico-from-hurricane-ida