The Insurance Landscape of 2023

We love to have agents contribute to our blog! Eric Tedmus is the founder and CEO of Tedmus Insurance Services and below are his 2023 predictions and recommendations. If you'd like to reach Eric, check out his website at tedmusinsurance.com

Here is a brief synopsis of 2022: 

 -2021 was very similar to 2020 in the standpoint of businesses and individuals being a ‘challenge’ and dealing with covid. Many layoff’s or  reduced staff have forced businesses to be pushed on edge.

-There is a large demand for Directors and Officers insurance due to covid claims, however there are minimal carriers to offer this coverage on the west coast at this time.

 -Inflation has taken a dramatic toll and impact on carriers.

 -Large scale lawsuits for ADA and other compliance issues have become a ‘targeted’ settlement business. 

 -From a Property and Casualty specialty practice we are still in the hard market and I don’t see this ending for another one/two/three years. Any insurance carrier that is writing business on the West Coast is trying to take rate --- meaning they are asking the insurance commissioners to INCREASE their pricing. Inflation, natural disasters, and rise in the number of claims have further increased the demand for carriers to increase pricing.  

 -Every carrier across the US has filed rate increase requests for personal and business.

 -No carriers left in many areas to write fire insurance – leaving the FAIR plan as a last resort.

Here is a ROUGH projection for 2023: 

-Similar to 2022, 2023 will see more hard market underwriting.

For example:  California Fire underwriting is now pushing Fire Line rating MORE compared to Protection Class. Protection Class is the proximity to Fire Department location. Fire Line is the susceptibility to wide spread catastrophic loss. In prior years, insurance carriers would NOT rate your home if your home is HIGHER than a FOUR… well…new underwriting (for pretty much all major admitted carriers) have moved that to a TWO…for instance you can be a Fire Line TWO rated right off highway 24 in Lafayette or even Orinda/Moraga.

This is a way for carriers to reduce widespread major losses

 -Higher priced reinsurance for insurance companies is the major cause for most increased pricing at this point.  Some reinsurance carriers have either doubled or tripled in cost. Look for this to stabilize in one to three years.

 -Look out for multiple rate increases now that the elections have finished.

 -Due to COVID, getting INTERIOR inspections has been temporarily halted. This may be lifted.  For most of our clients, this is actually a good thing. Most home purchases or policies require EXTERIOR inspections. This is normal.

 -Stricter underwriting guidelines EVERYWHERE! It’s now more difficult than ever to write many kinds of insurance business – especially fire on the West Coast.

 -Certain areas like Texas and Florida are having world level difficulty getting affordable insurance for wind and water!

 -A lot of uncertainty in terms of where the P&C, health, and life markets are going in 2023. Carriers haven’t experienced such challenges in a LONG time. Stability, changing industries, economy, financial markets, and government changes – everything is impacting 2023. As things change, I’ll keep you updated.

 -Due to COVID and the hard market throughout 2021, most carriers have STOPPED appointing agencies altogether on the West Coast – specifically due to the uncertainty.  2023 might see new carriers and opportunities come in – but again, we’ll keep you posted.

Recommendations:

-I said this last year… I’m saying it again this year ---- lots and lots of theft, vandalism, hit and runs, arson, and break-in’s for both personal and commercial.  I HIGHLY encourage both business owners and home owners to DOCUMENT and record inventory list(s) of their commercial and/or personal goods. Email the list to yourself! Either with spreadsheets, receipts, pictures, or videos. Remember, the burden of proof is on YOU to provide to a claims adjuster. Get this stuff done before bad things happen!

Speaking of hit and runs; IF you get into an accident, document right away! Get your phone out, look for witnesses, take pictures! Remember, people are desperate out there. Protect yourself and your assets!

 -Be careful of purchasing properties in brush zones or areas AWAY from fire response times – I would recommend speaking with me to see how insurable the location is!

 -I continue to recommend that if you carry an auto policy (either personal or commercial) to DOCUMENT or retain PROOF of odometer readings for your cars. Taking pictures of odometer readings or saving oil change receipts will help PROOVE/VERIFY how many miles you drive. More and more carriers are getting very PICKY about this. Documenting mileage is close to becoming an industry trend for verifying accurate mileage usage.