The insurance market is entering a “hard market” cycle. This means carriers are shrinking underwriting appetites, to the dismay of the professional snow and ice management industry. Remember, like many industries, the insurance industry is cyclical. However, the insurance cycle generally runs independently of other business cycles.
In the simplest of terms, and insurance market is soft when many insurers are competing for business and premiums are generally fairly low. A hard insurance market is the opposite of a soft one -- high demand for insurance coverage and a reduced supply. When the market hardens, insurers tighten their underwriting standards, issue a limited number of policies, increase premiums and are less inclined to negotiate terms.
Yes, shrinkage happens to every carrier and is totally normal in terms of restricted appetite and less likely to offer broad coverage – all at a higher price. The best way for a professional snow and ice management contractor can use this market knowledge in a volatile insurance environment is to mind a few “normal-size” points:
- In order to be prepared for increased costs to you for your snow services, be prepared to build added costs of services into your bid packages;
- Request copies of your loss history and understand what claims are open and which claims are closed;
- Be prepared to point out or understand whether your loss ratio is profitable or not in the eyes of the insurance carrier;
- Be sure that your insurance policy has the required endorsements which you agree to in your contract;
- Show documentation to your insurance agent that your snow and ice management company follows Industry Standards and snow and ice management best practices.
- Exercise some patience with your insurance agents as they struggle to negotiate a fair policy for your company with limited options being available.
In the end, make sure your snow and ice operation measures up to the challenges and opportunities that will exist in a hard-market scenario.Matthew Peterson is president of Marlton, NJ-based Mill’s Insurance Group, and a frequent Snow Magazine contributor.