Insurance traces its beginnings back to the 1600s and perhaps earlier. You have probably heard stories about Lloyd’s of London getting started by providing Marine coverage or that Benjamin Franklin established a fire insurance company in 1752.
After all these years, and the development of technology tools to forecast, trend, and better understand risks, you might expect the insurance industry could avoid poor financial results and the resulting underwriting panic that flows from those results.
In some cases, massive weather problems or catastrophic losses such as the burning of Paradise California will certainly create a serious hit to the reserves and profits of some segments of the insurance industry. Unusual or unforeseen events will catch the industry by surprise. This we all understand.
So how do I, as an insurance professional, explain to a longtime client, who has few if any claims with their company vehicles, that their Commercial Auto policy is not going to be renewed by the underwriter?
Upon investigation, we discover the Commercial Auto business has been losing money for the past 10 years. How does this happen? Simple – the underwriters underprice their policies year after year after year. Then 2020 happens and, as the businesses are struggling to maintain during a pandemic, the Commercial Auto industry decides it is the right time for the seizure to begin, and so they non-renew policies and charge excessively high rates for those they decide to offer coverage.
Is it socially responsible – NO.
Is it irresponsible – YES.
Have we seen it before – YES…
Will we see it again – NO DOUBT…
It’s times like these when a good relationship with your insurance agent is important and that you have an agent who has a good relationship with the insurance company. Good luck to all those businesses that bought coverage through a Do-It-Yourself website somewhere…
Yes, it is a difficult time in the world of Commercial Auto coverage, however, at Garland-Sturges & Quirk, we are doing our best to make a positive impact for you and your business.