Author, Dave Garcia, President, Rancho Mesa Insurance Services, Inc.

As we come to the end of 2020, the most challenging year most of us have ever experienced, where COVID-19, wild fires and other natural disasters took their toll emotionally, physically, mentally and financially on all of us, we can only hope for a brighter 2021.

The insurance industry did not escape the impact of COVID-19 and the natural disasters, either. Insurance companies, along with their reinsurance companies, suffered catastrophic losses as a result. As with many industries, there will be lagging actions that will take place in 2021 to help these companies in their efforts to recover.

While there really isn’t a line of insurance that wasn’t impacted, the lines of insurance that suffered the greatest losses and impacts include:

• Property

• General Liability

• Excess/Umbrella

• Workers’ Compensation

• EPLI

• Cyber Liability

• Surety

• Employee Benefits

For this article, I will limit my discussion to the property and casualty lines and leave surety and employee benefits to another day.

To offset these losses, I anticipate any number of steps insurance companies will take as we move into 2021. But, let me just touch on those that I think will have the greatest impact and need for attention to business owners in 2021. 

Let’s review these and I will try and give you a small sampling of the implications for each action.

• Non-renewing policies

  • Carriers in many cases will not offer renewal terms.

• Reducing coverage limits and terms

  • Increasing deductibles, lowering aggregate limits particularly in the excess/umbrella marketplace.

• Add new exclusions

  • Businesses will start to see “communicable disease” exclusions added to various lines of insurance.

• Increase underwriting information needed

  • A higher emphasis on information particularly as it relates to a business’s policies and procedures to mitigate COVID-19.

• Raise premiums

  • This is the ultimate consequence and one we are all anticipating to see beginning in early 2021.

To many businesses, this will seem daunting and hopeless - one more hurdle to overcome to keep their businesses going. However, there are proactive steps you can take to mitigate these circumstances and have a strong year despite the adversity.

I’m a firm believer in being pro-active and not re-active. Following are steps you can take to meet this challenge head on:

• Meet with your insurance advisor 90-120 days from your renewal date.

• Understand the specific challenges you will be facing.

• Create a strategy on how to approach the insurance marketplace to ensure the most cost effective and comprehensive risk management program.

• Review and enhance your existing safety program. Rancho Mesa offers our RM365 Advantage Safety Star™ certification program. This is a comprehensive web-enabled training course designed to enable your employees from supervisory to front-line workers to be trained and certified in safety best practices. The insurance marketplace already places a high value on these types of safety trainings and certifications, so this will help your company’s productivity through fewer claims but also position you in a more favorable position in the marketplace.

• Benchmark your company’s safety performance to your industry and see which areas you are outperforming your peers and areas that need your attention. Rancho Mesa offers a benchmarking report we call StatTrac™ to our clients or to other companies who want to see where they stack up.

To close, let me reassure you there is light at the end of the tunnel for 2021. Be proactive; start 90-120 day out from your renewal; don’t let insurance issues sneak up on you; attack them head on and I believe you can make 2021 a great year for you and your company.

If you have any questions or want any help in devising a plan and you are a construction company, please reach out to Sam Clayton, our Construction Group Leader at sclayton@ranchomesa.com. If you are in the human services industry, schools, non-profit, healthcare, assisted living, etc., please reach out to Sam Brown, our Human Services Group Leader. And finally, we can be reached at (619) 937-0164 or at our website, www.ranchomesa.com.

I really believe there is no limit to what you can do – best of luck in 2021.