January-February 2018

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34 PalletCentral • January-February 2018 017 will be considered one of the most devastating natural catastrophe seasons due to damage created by Hurricanes Harvey, Irma and Maria, the California wildfires and earthquakes in Mexico. In fact, as I write this article, the southern California wildfires continue. With losses estimated in excess of $100 billion (that's a lot of zero's!), Q4 insurance renewals experienced rate stabilization. In other words, rates did not decrease. As we move into 2018, it's anticipated that commercial insurers will continue to seek rates increase, particularly on tougher classes of risk such as forest products, or classes of risk with adverse loss history. Part of this is due to natural disasters. Or, losses incurred due to natural disasters have insurers more closely examining their portfolio of business. Those lines of business that might be considered underpriced, or those lines of business that have incurred not just large loss, but consistent loss, will be priced at an increase, or non- renewed all together. Flood Hurricanes Harvey and Irma will surely impact the flood marketplace. Flood-exposed risks were already closely scrutinized in recent years, which will continue. The National Flood Insurance Program (NFIP) has been under operating pressure for years. As of this past September 20, 2017, FEMA has borrowed from the U.S. Treasury, and continues to work with all companies to pay claims as quickly as possible so recovery can continue. Getting all remaining claims processed and paid remains the top priority. Checking the Box on Safety I worked with the President of a pallet manufacturer who voiced the frustration of many in the industry. Despite his operation checking all the boxes when it comes to workplace safety, facility maintenance, and hiring practices that produce low employee turnover, insurance pricing was not reflected in his company's best practices. Upon his business insurance renewal, pricing seemed skewed in-part due to those businesses of similar scope that do not check all the boxes when it comes to workplace controls aimed at safety, facility maintenance and employee turnover. Insurers may not admit it, but this owner was spot-on that his business insurance renewal did not take into account his business, and his alone. The insurers portfolio of business in the wood class, possibly pressure for rate from the insurers reinsurer, possibly overall adverse performance of a wood-based book of business due to wind storms, wildfires, 2 State of Commercial Insurance Market INSURANCE By Bradley Van Swol, AAI, CPIA Looking Ahead Natural Disasters are Having an Impact State of Commercial Insurance Market

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