Many Industries continue to navigate through the changes and challenges effecting business continuity during the ongoing Pandemic. The Commercial Insurance Industry too, has been rocked to its core, as it continues to come to terms with the lingering pandemic hurdles. Heightening concerns of a recessed economy, decreased marketplace capacity, gray area coverage terms, social inflation, and experts predicting an 80 billion dollars of loss to the insurance industry from the Pandemic, have left Insurers and Underwriters with extremely difficult decisions to make.
Be prepared to see renewal proposals distinctly and thoroughly exclude communicable diseases/pathogens as well as the implementation of aggregated limits across formerly dedicated limits. It would not be outside the realm of possibility to see Carriers demand substantial increases in retentions. Perhaps even deviating from offering only traditional insurance products to introducing parametric insurance options may be on the horizon. It is anticipated that Carriers may announce significant changes to their list of acceptable classes of business. Revised Carrier applications with a drastic increase in required information and notable, specific disclaimers may challenge renewal and marketing timelines.
No doubt, the hard market will continue through 2021, but being prepared and informed will help contain expected renewal increases in July. As a result of the new educational platform most school districts have implemented, i.e., remote and hybrid learning, the spike in Cyber Liability/ Data Breach claims have skyrocketed. Phishing and hacking practices have resulted in thousands of complaints to the FBI every day. It is expected that this line of coverage will need to generate a 10-30% premium increase to offset the pandemic loss totals that continue to accumulate.
2020 has been a particularly rough year for Employment Practices Liability, an already volatile line of coverage. Layoffs, discrimination, invasion of privacy, racial discrimination, and the push for diversity may pave the way to a 30% increase and a reduction in available limits. Excess Liability Increases upward of 25% have been mentioned throughout the public entity insurance industry. Double digit property and general liability increases are not out of the question. CAT exposed clients are forecasted to feel the brunt of these increases.
The good news for our school districts is that time is on your side. For those districts considering the RFP/RFQ process, now is the time to publish. Begin working with your Broker very soon to understand how your current insurance program’s terms, conditions, limits, and pricing will be affected and what preparations are being made to begin marketing your program to alternative carriers.