Magazine article Journal of Property Management

Risky Business: Insurance Carriers Change Underwriting Process. (Cover Your Assets)

Magazine article Journal of Property Management

Risky Business: Insurance Carriers Change Underwriting Process. (Cover Your Assets)

Article excerpt

While conversations about insurance wont send everyone into cardiac arrest, it's safe to say most property managers today are experiencing significant changes to their insurance programs. The lucky few who negotiated three-year programs prior to September 11 must be the same people who sold all their dot com stocks at peak prices.

Contributing Factors

What do property managers need to do? Blaming the entire problem on September 11 is not the answer. As early as first quarter 2001, costs increased for many lines of insurance, in particular, property insurance. Premium increases were not irrational, as an orderly marketplace raised rates in response to increasing loss ratios, higher operating and reinsurance costs and a significant decrease in investment portfolio returns for all insurers. Throughout the bull market of the 1990s, insurers were achieving overall positive results with a heavy dependence on a strong return from their equity and bond holdings. With the drop-off comparable to what many private investors witnessed, the focus on profitable operations shifted to adequate pricing. With major property catastrophes occurring around the world and in the United States, 2001 turned our to be a very bad year for the insurance industry. Some insurers witnessed a medical malpractice claims explosion while others saw a new wave of asbestos claims and a major spike in liability suits and settlements for directors and officers.

Property managers are faced with a changed insurance industry. …

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