Placing You First Insurance Podcast by CRC Group

Storms Ahead – Rising Wind Rates Hit Coastal Homeowners

August 03, 2020 CRC Group
Placing You First Insurance Podcast by CRC Group
Storms Ahead – Rising Wind Rates Hit Coastal Homeowners
Show Notes Transcript Chapter Markers

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As Hurricane Isaias impacts the US, coastal homeowners rely on insurance agents to find competitive coverage.  We discuss how insurance agents can better serve their clients in a tough market for placing coastal homeowner insurance.

The 2020 hurricane season stormed in with a record six named tropical storms by early July. But in addition to forecasts for an active storm season, coastal homeowners from Florida to Texas are facing sharp rate increases as insurers seek to rein in catastrophe losses. Carriers are tightening underwriting guidelines, limiting capacity and, in some cases, pulling out of markets. Rate increases are particularly steep in South Florida’s tri-county area, but Gulf Coast homeowners from Florida to Texas should also expect higher premiums and increased deductibles as well as fewer options for wind coverage.

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 Featuring:

  • Greg Watson is the Office President of the CRC Charlotte office and a member of the personal lines practice advisory committee
  • Claire Willis is the National Personal Lines Practice Leader located in the CRC Jackson, MS office.

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[00:00:00] Dan Wentz: This is the placing you first podcast. I'm Dan Wentz and this podcast features news and insights from CRCs fast knowledge base of 2000 plus associates who write nexus of $8 billion in premium annually. And we're giving you insider access to what's happening in our company and the types of insurance we place.

This 

is the placing you first 

podcast. We're talking coastal homeowners, insurance, or rates rising. What's going on with underwriting capacity in what regions are there, unique challenges. We want to find this all out. So we've got two CRC groups, personal lines specialists joining us today. Greg Watson is here.

Greg is from the CRC Charlotte office and a member of the personal lines practice advisory [00:01:00] committee. They recently opened that office. It's pretty new to CRC. How long has it been 

Greg Watson: Greg? It's been about 10 months excited. Well, 

Dan Wentz: it was brand new to me. great to have you here. It's a trial by fire. A welcome to the company.

First podcast. Can't think of any better way to welcome you. And. Welcome to the podcast. Of course, Claire Willis is also here today. Claire Willis is the newly announced personal lines. Practice leader. Talk a little bit more about that in a bit, but she is located in Jackson, Mississippi. Great to have you on here, Claire.

Thanks for joining us. 

Claire Willis: Absolutely excited to be here. 

Dan Wentz: So let's start with Greg, Greg. First of all, I've heard that 2020 is expected to be an active hurricane season. there's you know, I've heard some stuff on the news. What are you hearing?

Greg Watson: Yeah, I mean, it definitely was expected to be an active season and it already has turned into an active season. [00:02:00] So a hurricane season of course starts June 1st, the start of the summer and goes until November 30th. we've got four months left. I mean, it's just July 30th and we've already had eight named storms.

We've got another one brewing, this week, tropical storm Isaiah's, which is projected to hit the East coast and possibly move into the Carolinas, my territory. But, as of right now, the national oceanic and atmospheric administration, they said we're going to have about 11 to 13 named storms. I think we might have a little bit more with, four months left, but, It's definitely been active.

I mean, hurricane Hannah just hit landfall in Texas last week. So it's been interesting already. Yeah. I've 

Dan Wentz: been getting the storm alerts in my, in my email. And I'm just amazed by how many they are. I mean, you think it would take a break for coronavirus or something, but Nope, we don't 

Greg Watson: get it. It's like 

Dan Wentz: 20, 20 man.

We're on record, right? it's all about how you view it though. cool. So, right now, Very timely. This is the time to be talking about coastal [00:03:00] homeowners insurance because of that, active hurricane season. And what's going on in the markets, Claire, what do you have? as far as tips, go for insurance to prepare for hurricanes.

Claire Willis: Yeah, they need to read and understand their homeowner's policies. It's important to know what Linden Hill or name, storm deductible you have on your policy. And it's also important to know what your duties are as an insured. especially after a loss. Other important to us are really to protect your home.

You know, if you have some tree limbs that are overhanging your roof, you know, trim them back to the vent, raise claims. I'll say you can have, clabbered, shedders put on your windows. When a hurricane is headed your way. And also too with that, a lot of carriers give credits for shatters. So it not only protects your home, but it can give you credits for your, your premium on your insurance.

another thing is, you know, to really do an inventory and keep a list of what you have in your home. it's a good idea to take pictures. We can go around your home, just kind of rainbow rain, cause it's really hard to remember exactly what you [00:04:00] have. So it's really important to keep a really good inventory list.

So you can just go down with the phone and take a picture room by room. So you'll have that in case it's needed. another thing is just to really, you know, plan, you know, having a route and evacuation route on where you're going to get and what's your plans going to be? so just to be prepared, so there's just some tips that I can pick up.

Dan Wentz: Absolutely. Yeah. The shutter thing, I didn't realize that you get a, you know, get a little bit of credit for that. You have shutters on your house. Greg, what are, how are rates deductibles in terms looking for coastal homeowners right now and what is, what is behind all this? What's what's driving them.

Greg Watson: Yeah. I mean, basically homeowners. I mean, this is from the Carolinas down to Florida and over to the Texas, we're, we're all facing a sharp rate increase. property is definitely hitting on all cylinders. and we're also seeing higher wind and hail deductible requirements, definitely in certain areas.

a lot of retailers right now, it's, it's, it's a lot of explanation. and I think we're doing a great job of being [00:05:00] proactive and trying to get ahead of our retailers. So let them know. but there's a lot of accounts being shopped right now. And that is because of the rate increase. And also because of when to inhale and named storm increases on deductibles.

and a lot of these factors contributing to it. I mean, three of the main things, I mean, we had in 2017, hurricane him, which of course is Harvey Irma and Maria, I mean, combined was $90 billion North of, losses. and then 2018, the great state of North Carolina had a nice loss with Lawrence. And then we had Michael down in Florida that was another 15 billion and a Dorian as well down in The Bahamas, was close to about 5 billion.

So with all of that, that. That didn't help our, our market. it didn't help with a lot of our Lloyd's contracts, across the country, among wholesalers attritional losses, definitely took an increase. so there were a lot of water claims from busted pipes. and. There's a lot of modeling going on.

So [00:06:00] certain of course, underwriting locations, based on the year bill, when mitigation the construction type, the distance of coast, some model better than most and some don't fare too well. And so we're, we're learning about the different modeling systems that people are using and not all of them are the same.

And so with all of that, I mean, capacity is definitely tightening in the Lloyd's marketplace. 

Dan Wentz: Yeah. So it's, it's getting, getting harder, Claire, any areas that are tougher than others when you're trying to do coastal homeowners. I mean, obviously anything along the coast is going to be a little bit tougher, but, but where are we seeing the most problems right now?

Claire Willis: I think in Florida, it's really tough. Right now you're seeing capacity issues. I'm curious, you're pulling out, To have aggregated is almost like gold in certain areas because you know, so many carriers you're pulling out and right next man, also you're seeing insurance take stricter terms where there is taken a higher wind and hail deductible, or, you know, deductibles with $10,000 water damage deductible, you know, due to the age and things like [00:07:00] that.

So you're definitely seeing stricter terms being offered and you're seeing, you know, a large rate increase in the panhandle and they're being hit really hard right now. And you're seeing a lot. go to the open market that maybe wasn't in the past, you know, So that that's a big deal. I'm in Mississippi, you know, Deanna, we're seeing the same thing we're seeing rate increases.

we have one carrier domestic area that's doubled their rights. and we've had one carrier that's pulled out altogether. same as in Florida, you're seeing the hat higher wind and hail deductibles being offered. And, you know, in insurance, I mean, insurance companies are really looking at the risk mitigation as far as, you know, how are the insurance updates and what they have as far as reef straps, shutters.

impactors slash know what they have to protect their homes and, you know, modeling results. A lot of things, you know, are being modeled to look on a case by case basis to see, you know, how it models, as well. in Texas, you're seeing the same thing you're seeing, right. Increases as little as 5%, but up to 25%, and capacity is getting tied as well.

And like [00:08:00] Greg mentioned earlier, you know, you had hurricane Hannigan, which is cat one, you know, recently. So it'll be interesting to see how that plays out in the market. As well, but it is experiencing the same rate increases and capacity issues. 

Dan Wentz: And Greg, you have anything to add to that? Is that the same thing?

You're 

Greg Watson: moving over to the East coast yet down in the Carolinas, South Carolina, North Carolina. Ghost. I mean, approximately five to 15%, along the coast in regards to an increase, we're definitely seeing some pockets, increasing, more than others, such as Charleston County, down in South Carolina, also the outer banks in North Carolina.

I mean, we're seeing anywhere between 10 to 25% increases there. Everything, kind of factors into that the year built of the home. We're seeing a lot of older construction down in Charleston, the occupancy of the home, whether you've got a vacation rental or a full time rental and also the distance of the coast.

So all that really, determines what's going on and the model. And over the past [00:09:00] five years, the model results, and the increased nutritional loss ratios has definitely reduced the coastal capacity. admitted markets are coming in on the Carolina coast. They're writing a little bit of newer homes, primary, secondary occupancy, so very vanilla type business.

But again, the where the ENS comes in, it's going to be older homes that we see a lot of, down at the coast. So anything newer construction, I think everyone's competing on just because it does model better. It's going to have more wind mitigation features, but. When deductibles are increasing, just as I said before, Lloyd's is, is a big player for us and among the many other of our competitors along the coast.

And, we're seeing it approvals increase, from 2% to 3%, sometimes 2% to 5%. and a lot of that has to do with the barrier islands. so. Again, there's a lot of business out there and a lot being shopped right now, and it really takes good underwriting expertise to, pick up the good stuff that's out in the market and just walk away from [00:10:00] the bad stuff.

Just cause you don't want to get, add stuff on your books of business. So. 

Dan Wentz: For sure. So across the board, it sounds like rates are up capacity is down terms are tightening pretty tough market right now. Claire, how can agents help their insureds to mitigate these, these challenges? How can they, is there anything they can be doing to kind of offset this?

Claire Willis: Yeah, I think it's important to have conversations with your insurance. you know, let them know that rate increases are coming, you know, especially, you know, if you're talking to them before they get the renewal offer, you know, let them know what to expect. Communication is key. So if they know that a rate increase is coming, it might.

It might not be as a big shock to them, you know, when they actually get the renewal, that might be five, 500 to $600 higher. So just communicate with the insurance, that rate increases are definitely coming due to the market. also now you just have conversations with the insured to say, you know, make sure that all, when mitigation credits are being applied to the home, you know, again, I mentioned earlier you get credit for shutters.

You also get credits for hip roof. Straps impact resistant glass. It [00:11:00] just makes sure, you know, the insurance agents are all on the same page and really know what would make the mitigation they have for the home. So they are getting all the credits to get the best inserts 

Dan Wentz: for sure. And you know, at this time it probably makes sense to find a CRC personal lines producer, to help you out with this.

What kind of value do you guys add? when it comes to placing this kind of stuff, besides all of the great information you're already sharing with us. 

Claire Willis: CRC, we have a lot of experience, knowledgeable underwriters and seasoned underwriters that have been in the market. They aren't in soft market. So we definitely have the, experience.

we also aim to provide great customer service to the retail agents. We want them to know that we're there for them, especially during the hard times and, you know, placing those hard accounts and having those tough conversations, you know, with the renewal terms. And I'll say, We have access to a lot of different domestic heres and voids markets.

So we try to provide the best, best terms we can for the insured. So I think just for the combination of our knowledge and expertise and, our access to [00:12:00] markets, you know, we're able to help the agents the best we can 

Dan Wentz: for sure. And what do you think Greg. How do you guys add more value up there in Charlotte?

Greg Watson: Yeah, well, no. I mean, it's been a it's it's honestly, it's been a great opportunity to open up CRCs first, Charlotte operation and, being with a company of this size, having the market access and the access to technology has been, just a game changer for not only me, but for my fellow coworkers that have, joined the Charlotte team since our, start back in October of 2019.

Honestly, what this means for our clients though, is we've got a lot of underwriting expertise on our team and we're here to bring a local relationship and some local value to some of our large retail brokers, across not only Charlotte, but the Carolinas. So we're excited to be here. 

Dan Wentz: So yeah, it works by you to have you we're we're glad you're here, Greg, for real.

So let's talk a little bit about, Claire, you were recently named the national practice lines leader, which is new to [00:13:00] CRC group. So I thought maybe you could take a couple seconds and, and tell us, you know, about how that new role plays into things here at CRC group and how that's gonna benefit our agents.

Claire Willis: Yeah, absolutely. First of all, I'm so excited to be a part of an organization that is growing and putting a lot of time and investment into it. Opening new offices and technology. So I think that the two really exciting to be a part of this. just over the last 12 months, we've added five new personal lines teams, in, you know, Greg's office, you know, Charlotte has the first line scene.

We've got one in Houston and new Orleans. Tampa and you've got one in Pennsylvania, so that's just five new offices, which is great. I'm going to spend more my time focusing and helping, you know, first salons across the organization to help them grow, get new market support and capacity within the one market and, you know, really focused on that.

And then, we have a really exciting, online program that we're gonna launch the end of the year that we're really excited about. It's going to be a quote by an issue, system. And so it's, that's going to be great. [00:14:00] for our retail agents and technology-wise, so we're really, really excited, excited about that spending a lot of time on that.

So, I'm really excited about the opportunity and, you know, look into gray, personal lines within the organization even more so it's exciting 

Dan Wentz: if you would like some more information about Gregor Claire, by the way, Claire was just in the press. She was just in the insurer. Just released a story about her.

You should check that out. That's on our LinkedIn page search CRC insurance services to find that, or the personal lions practice group. If you're looking for some more information on that, we've got some stuff up online@crcgroup.com. You can also contact any of our personal lines producers. And by the way, it's super easy to find them.

You just go to the website, click through to the, to the people search and, you know, you'll see every personal lines producer. CRC has. Up there and you can contact one it's near you or reach out to Greg or Claire or whomever. we, we definitely want to take care of you here at a CRC group. So, Clara, Greg, thank you so much for joining us for this podcast.

We really appreciate it. 

Claire Willis: Yes. [00:15:00]

 

How active will this hurricane season be?
How can insureds prepare for an active hurricane season?
What is happening with rates and what is driving them?
What areas are giving us the biggest challenges right now?
What can agents do to mitigate this tough market?
How do CRC producers help with tough coastal homeowner placements?
Claire is the new personal lines national leader. What does the personal lines practice at CRC mean for agents?