01/19/2023
As we mentioned during our presentation at the Fraternal Housing Association, Inc. annual meeting this past September, property rates and reconstruction costs continue to steadily increase.
The U.S. commercial property insurance market has been facing catastrophic losses from a wide range of weather and natural disasters, which have been compounded by supply chain, inflationary, and economic factors. Events such as Hurricane Ian, Texas Winter Storm Uri, wildfires, major hail and convective thunderstorms in the Midwest, flooding in the southeast, and other events contributed to more than $260 billion in property losses in 2022. The recent historic extratropical cyclone which created winter storm conditions, including blizzards, high winds, snowfall, and record cold temperatures across the majority of the United States and parts of Canada will push 2022 losses even higher. Natural events and disasters have become more severe and frequent, and much harder to predict causing reinsurance costs to soar.
According to a recent report from Verisk, national reconstruction costs increased 6.8% from January 2022 to January 2023. The overall significant increases being seen in reconstruction valuations are due to supply chain issues, inflation, material cost increases, and labor cost increases which is making the property renewal and new business market extremely challenging. While higher valuations will impact overall renewal premiums, it is imperative to insure each location to the full reconstruction valuation for overall program stability.
The commercial insurance industry is reevaluating all property exposures in the catastrophic loss areas therefore asking for more targeted rate increases for those locations with earthquake, named storm, and flood exposures. Greater attention to proper maintenance and loss control is a central focus as we help clients navigate through their individual renewals.
The best way to protect your fraternity facility is to ensure you are complying with loss control inspection recommendations and you are properly maintaining your facility during periods of unoccupancy such as summer and holiday breaks. If your facility is equipped with a sprinkler system, you should have the system regularly inspected by a sprinkler contractor to ensure it is fully operational and properly insulated to avoid frozen pipes and water damage losses which is the number one cause of loss in our fraternity program over the past five years.
Photo below: A recent pipe burst in Kansas during the 2022 holiday cold snap. Regularly check on your facilities during breaks to ensure the buildings are secure and proper temperatures (60 degrees or higher) are being maintained.
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Remember Loss Control = Cost Control.
