Florida’s commercial property owners are worried — and they should be. Amid the hurricanes hitting the shores of the Gulf and Atlantic coasts this year, businesses across Florida are bracing themselves for staggering spikes in catastrophic property insurance. Some are facing renewal increases of up to 125% or more.
Escalating risks and mounting losses due to catastrophic natural disasters have prompted insurers to increase premiums, limit coverage options and even withdraw from the market altogether. These changes, coupled with recent shifts in the regulatory environment, have thrust the onus of safeguarding policyholders onto the businesses themselves.
Hard markets create difficulties for everyone, but especially for those least prepared. Luckily for Florida’s commercial property owners, there are ways of being proactive that can help.
Understand your coverage.
In a hard market, preparation is key. Beyond monitoring industry trends and legislative shifts, property owners must proactively engage in strategic measures and use the right tools to minimize the impact of rising insurance expenses and maximize coverage terms and conditions. Understanding the details of your insurance program is step one. In this case, knowing what’s not covered is as important as knowing what’s covered. Make sure the terms and conditions meet all of your requirements and will protect you in the case of a catastrophic claim.
Understand your exposure.
Before seeking or renegotiating coverage, it’s important to understand your business needs and risk tolerance. Whether you require comprehensive all perils coverage or just protection against catastrophic events, a thorough exposure analysis can uncover hidden vulnerabilities and help you understand your risks. This will help ensure your insurance strategy aligns with your business goals and insurance requirements, enable you to consider your needs from a fresh perspective, and facilitate creative solutions that optimize coverage and reduce costs.
Consider alternative solutions.
Shifting market dynamics call for creative insurance purchasing strategies, and emerging products present fresh opportunities. Parametric insurance, for example, triggers coverage not solely based on physical damage, but on the occurrence of a defined event. This type of insurance is particularly useful for infilling deductible liabilities associated with high percentage deductibles or even as a substitute for traditional indemnity-based coverage when traditional coverage cannot be purchased (due to a lack of capacity or exorbitant pricing for available capacity). Parametric insurance also can serve as a valuable supplement to traditional coverage and act as a tool to address specific risks not covered by traditional methods.
Additionally, consider adjusting terms and conditions to strike a balance between cost and coverage. Using a flexible, analytical approach, you can devise a solution that manages costs and meets your unique business needs.
When exploring alternative solutions, remember what suits one business might not suit another. Analyze each alternative and make sure to weigh options outside of your existing program structure before making a purchase.
Stay prepared, and safeguard your business.
We might be in the midst of one of the most challenging insurance landscapes ever experienced, but Florida’s commercial property owners have the tools to stay afloat in this hard market. By embracing proactive strategies, businesses can weather the storm of rising property insurance costs while safeguarding their assets and financial stability.
Chris Tolland is the Executive Vice President of Foundation Risk Partners, based in Daytona Beach, Fla. Any opinions expressed here are the author’s own.
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.