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Weather, COVID, Riots, Cyberattacks All Leading to Insurance Rate Increases

Published in News on by Joyce McMahon, Freelance Writer

Snow and arctic temperatures in Texas. Wildfires in California. Floods and wind storms in the Midwest. Tornadoes in Massachusetts. As weather and climate change-related disasters continue to grow, so does the cost of property insurance.

These disaster-related cost increases are not confined to the affected areas, however. That’s because most major insurance companies insure each other (via reinsurance) and have clients across the country. And while a risk of disaster is assessed for each location, the incredible mounting increases in damage claims over the past several years means many of those costs must be shared among all policy-holders.

In February, Willis Re, the reinsurance division of Willis Towers Watson, reported that insured losses from major natural catastrophes in 2020 reached roughly $78 billion, the fourth largest total since 2011 and about 17% higher than the 10-year average ($66.5 billion). Despite the limited impact of North Atlantic hurricanes during a very active season, the substantial total loss is attributable to “a series of small and medium-sized events.”

Jan. 27 article in Insurance Business America reports that, “The cost of property insurance is expected to continue rising for the foreseeable future,” citing Risk Placement Services’ 2021 U.S. Property Market Outlook. The effects will be felt by every commercial insurance buyer, according to RPS — whether through higher premiums, less capacity, stricter terms, or all three.

“During the first half of the year, insureds can expect rate increases from the high single digits to the 15% range on clean accounts, and higher increases on accounts with losses,” the article states.


Workers’ compensation and cybersecurity

It’s just not natural disasters that are leading to insurance price hikes.

In its recently published outlook for the commercial property/casualty market for the fourth quarter of this year and the first half of 2021, USI Insurance Services LLC forecasts that workers’ compensation could increase by as much as 5%. Much of the activity in that area arises from COVID-19 claims, according to Willis Towers Watson’s 2021 Insurance Marketplace Realities.

Another area where claims have grown is cybersecurity. Almost 75% of cyber insurance claims involved an insuring clause related to breach incident response and crisis management. Data privacy breaches represented the second-most common insuring cause, followed by cyber extortion. North America ranked second in the world with 33% of all cyber incidents in 2019.

Ransomware has emerged as the most common cybersecurity incident cited in reported claims (41%), and the average ransom demand has increased from an estimated $230,000 in the first quarter of 2020 to nearly $339,000, according to research from Coalition, a top cyber insurance provider.

Last September, Standard & Poor’s reported that cyber insurance premiums, which now total about $5 billion annually, will increase 20% to 30% per year on average in the near future.


Looking ahead

In its total insurance industry recap, Risk Placement Services expects the following trends for the insurance market in 2021:

  • Every commercial property insurance buyer will feel the effect of a firming market.
  • Reinsurance will play a larger part in pricing terms than in the years past.
  • Rate increases can be expected in the high-single digits to 15% range on clean accounts, and higher on accounts with losses.
  • Catastrophe deductibles will be converted from flat dollar amounts to percentages, withpercentages increasing from 2% to as high as 5% in some areas.
  • Multiple insurers will be needed to assemble higher excess coverage limits.
  • New communicable disease and riot exclusions will be introduced.

As municipalities engage in the budget planning season, they are advised to consult with all their insurance providers to ensure that their coverage is better than adequate and that their budget is prepared for anticipated hikes in premium costs.

Rising insurance costs can be managed by a full risk assessment across all exposures, locations and operations. Local officials are advised to evaluate all coverages, limits, deductibles and retentions. The end goal should be a strategy for each line of coverage, where pricing, terms and conditions are adjusted for the current environment, and with an eye toward ongoing monitoring for the foreseeable future.



What to Do if Someone at Home has COVID

By Joyce McMahon, Freelance Writer

People are now getting vaccinated against the COVID-19 virus, but the process is slow, and variations of the virus, with a higher transmission rate, persist. While COVID health data in Massachusetts is trending downward, health experts warn that we still need to keep our guard up.

We’ve all heard how to help stop the spread of the infection: wear a mask (or two), wash your hands frequently, don’t touch your face, stay 6 feet away from others, and don’t socialize with others from outside your household.

Planning for and knowing what to do if someone in your house contracts the virus is also very important. The first step, if you haven’t already done so, is to create a COVID kit with the following supplies: thermometer, fever-reducing medication, disposable gloves, soap and hand sanitizer, tissues, face masks, and disinfectant cleaning supplies.

According to the U.S. Centers for Disease Control and Prevention, most people who contract the coronavirus will have mild symptoms and will be able to recover at home. If you or someone you live with is considered high-risk for COVID-19 or experiences severe symptoms, you’re advised to seek medical attention as soon as possible.

Whether asymptomatic or symptomatic, the CDC says the infected person needs to self-isolate — keeping physically distanced from the rest of the household by staying in one room (with doors shut) and using a private bathroom if possible. If separate spaces are not possible, improve the airflow by opening a window and/or using an air purifier with a HEPA filter if possible. And always have the sick person wear a facemask if around others in the house.

COVID-infected individuals should only leave the house to seek medical attention, and should avoid public transportation and ride shares.

Other household members must also quarantine at home for 14 days from the last time of contact with the person who is sick, according to the CDC, and need to monitor their symptoms. COVID-19 symptoms can begin from two to 14 days after the last date of interaction.

Regularly clean all surfaces in your home, and keep laundry separate from that of the person who has COVID-19.

If you are at high-risk for COVID-19, it is particularly important that you not be the caregiver for your ill housemate.

The CDC recommends the following steps to support a sick housemate:

  • Check in on them by text messages, phone calls, Facetime, etc.
  • Bring them food and water and leave it outside their door. Wash your hands immediately after handling any dishes they may have touched.
  • If the infected person is bedridden; enter the room while both of you are wearing masks. Wash your hands immediately after going into their room.
  • Encourage the infected person to take their temperature regularly and share their readings with you by email or text.
  • If interaction in the household is unavoidable, all persons should wear a face mask.
  • Provide over-the-counter medication to treat symptoms.
  • Call their health care provider if symptoms become worse.
  • Do not allow visitors who do not live in the home to come inside.
  • Wash your hands with soap and water after you interact with the infected person.

Quarantining and caregiving can be challenging, but taking the best safety measures while you’re in this situation can help ease the time, and hopefully provide a better outcome.

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