Rancho Mesa's Alyssa Burley and Account Executive Jeremy Hoolihan discuss signs of the continuing hard property market in 2023.

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Director/Host: Alyssa Burley

Guest: Jeremy Hoolihan

Producer/Editor: Lauren Stumpf

Music: "Home" by JHS Pedals, “News Room News” by Spence

© Copyright 2023. Rancho Mesa Insurance Services, Inc. All rights reserved.

Transcript

[Introduction Music]

Alyssa Burley: Hi! This is Alyssa Burley with Rancho Mesa’s Media Communications and Client Services Department. Thank you for listening to today’s top Rancho Mesa news brought to you by our safety and risk management network, StudioOne™. Welcome back, everyone. My guest is Jeremy Hoolihan, Account Executive with Rancho Mesa. He specializes in risk management and insurance for the janitorial and maintenance industry. Today, we're going to talk about signs of the continuing hard property market in 2023. Jeremy, welcome to the show.

Jeremy Hoolihan: Hi Alyssa, it's great to be back to StudioOne™.

AB: From what I've heard, the property insurance marketplace continues to be a challenge in 2023, and it's not unexpected with all the catastrophic events that have occurred over the last several years like hurricanes, floods, wildfires and major storms. So, do you expect property insurance pricing to continue increasing for the foreseeable future? And if so, what are some of the reasons that would cause this to happen?

JH: Yes, I do foresee the property market continuing to be a struggle throughout the industry. There are several reasons for this. For example, you know, a lot of insurance companies are seeking to create more geographic diversity. They're also looking to lower their amount of exposure with their existing policyholders. So, we're seeing insurance carriers create a larger high risk zones, meaning they're just starting to decide to not write insurance in specific areas. Examples would be, you know, fire zones where they've had pretty strong hits with regards to losses. Also, underwriters are paying really close attention to the properties that they currently write. In the past, it was rare on properties that were smaller in value, that we would actually have lost control, visit these accounts. We're seeing more and more of that and it's becoming more common. One example is, I recently had a loss control visit to one of my existing clients, and during that visit they became aware of an electrical panel that they had. It's a it's a brand called Zinsco. And unfortunately, there's been over several billion dollars in losses with regards to these electrical panels because they can just spontaneously combust if they're over exuded. So, now we see insurance companies that will come out and if they identify this panel as an existing panel, they will either do one of two things. They will get off the account right away or require that the building owner replace that with a newer model.

AB: Wow, and that's something we haven't seen before.

JH: Yeah, we really haven't seen that. And it's to the point where if, you know, a client of mine has a Zinsco panel, you know, I recommend that they change it immediately.

AB: Yeah.

JH: Yeah. So, another kind of indication of the stress on the property market is recently the insurance commissioner Lara, made an announcement to increase the commercial property fair plan limit.

AB: Ok.

JH: The existing limit was 8.4 million and he wants to increase it to 20 million. And the reason for that is, you know, owners of commercial properties that could be, you know, apartment buildings or commercial buildings themselves are finding it very difficult or impossible to ensure their buildings in specific zones. So, unfortunately, you know, the fair plan has to come into play in those situations where people cannot find property on their own. It's kind of essentially the coverage of last resort. Right?

AB: Right, so if the carriers don't want it…

JH: Right. So, yeah, so, state planning comes into play and, you know, some of these buildings are valued over 8.4 million, which is the existing limit. So, they're kind of stuck in no man's land.

AB: Yeah.

JH: So, Lara has recommended and approved that limit to increase to 20 million. So, that's kind of a true sign of the stress within the marketplace.

AB: Yeah. So, what do you recommend business owners do to combat these changes in the marketplace?

JH: Well, one thing I recommend is definitely getting together with your insurance broker to review the policy limits that you currently have in place. You know, over the last several years, you know, with COVID and other related issues, material costs have gone up, labor costs have gone up. So, where the limit you had three or four years ago might have been adequate, you might be drastically under-insured at this particular time. So, it's very key and important to look at your policy limits, to establish whether they're accurate or not. Most insurance policies have co-insurance limits. So, if you are underinsured and you have a loss, there's potential to not recouping the total amount based on the loss. So, that would be one huge recommendation. And then, just looking at your limits and values that you currently have in place and changing those accordingly.

AB: Yeah. And really talking to your broker and trying to understand what is covered and how much.

JH: Absolutely.

AB: So, Jeremy, if listeners have questions about their risk management, what's the best way to get in touch with you?

JH: Yeah, Alyssa. I can be reached a couple of different ways. My direct line is 619-937-0174 and my email address is the letter jhoolihan@ranchomesa.com.

[Outro Music]

AB: Jeremy, thanks for joining me in StudioOne™.

JH: Thanks for having me, Alyssa. Appreciate it.

AB: This is Alyssa Burley with Rancho Mesa. Thanks for tuning in to our latest episode produced by StudioOne™. For more information, visit us at ranchomesa.com and subscribe to our weekly newsletter.