Mid Atlantic Real Estate Journal — Fall Preview — September 28 - October 11, 2012 — B
www.marejournal.com
I nsurance By Frank DeLucia, HUB International Northeast
usinesses everywhere, including those in the Real Estate industry Five things you need to know to navigate your RE business through a hardening insurance market B scaping to show that you have taken care of the property.
• Consider how much risk your business can assume through higher deductibles or even self - insurance where possible. • Look to transfer risk to suppliers and contractors. • Review the limits of insur- ance you have and consider how much you actually need. 2) Understand and Manage Your Claims • Be able to demonstrate an understanding of the claims you have had in the past. • Show that you have been proactive in preventing a re- currence of the type of claims
that you have incurred. • Be proactive with your broker and carrier to ensure open claims are being properly managed. Often times, claims reserves can be lowered, which presents a better picture of your loss experience to poten- tial carriers. 3) Demonstrate Your Com- mitment to Preventing Losses • Workers’ Compensation rates are rising throughout the country due to poor un- derwriting results. Be able to present to your dedication to Workplace Safety. Update your employee handbooks,
driver safety manuals, provide appropriate protective equip- ment, and implement other measures that specifically ad- dress safety. • Address outstanding in- surer recommendations. Fix the crack in the sidewalk, unlock the alternative means of egress, install emergency lighting, etc. • Design Safety into your business – focus on redesigning processes to remove hazards where possible. 4) Share Your Business Plan continued on page 12B
When it comes to insur- ance, in order to get the best price, you should make your company look as attractive as possible so that you will have multiple insurers wanting your business. Here are five ways you can make this happen: 1) Conduct a Risk Assess- ment of your business. Your insurance broker can help with this. Understand the risks as- sociated with your business and explore alternative ways to manage this risk
face upcom- i n g c h a l - lenges due to gradual - and in some cases not so gradu- al - changes wi thin the i n s u r a n c e market. De-
Frank DeLucia
pending on the geographical location, and loss experience, rates are increasing anywhere from 5% to 10%. In some cir- cumstances, the increase can be much higher. For example real estate business with prop- erties in close proximity to wa- ter or flood-prone areas; can get hit with a premium increase as high as 40%! The turn in the insurance market is the result of a num- ber of factors, including the following: • The Cyclical Nature of Insurance – The insurance market is characterized by prolonged soft markets with falling rates and increased capacity, followed by short hard markets where rates rise rapidly while capacity disap- pears. • The Economy – Property & Casualty carriers have been paying out more dollars on claims and expenses than they’ve collected in premium, with no ability to earn invest- ment income on the money they collect. Traditionally, car- riers earned their profit in the bond markets, and have seen those profits drop off over the past couple of years. • Historic Catastrophic Ac- tivity – There has never been a string of catastrophes as costly as those that occurred in 2010 and 2011. From earthquakes to flooding, tsunamis to tornados, and numerous other catastro- phes (hurricanes, thunder- storms, wildfires, etc.), carriers have had to pay out record high numbers over the past two years. So, with the economy still stuck in neutral, rates rising, and carriers underwritingmore carefully, what can a business owner do to prevent premium increases from further strain- ing their budgets? Think of it in terms of selling a home. To get the best price on a home you want to sell, you make it look as attractive as possible. New paint job, remove the clutter, maybe some land-
Made with FlippingBook flipbook maker