Thoughts from the Underwriting Corner as we finish 2022 and head into 2023.
We thought COVID would wreak havoc and it sure did, turning all of our prior notions of how and where we work upside down. You only need to look at the job search sites and see references to remote and hybrid work. My guess is it will never be the same. Technology played a huge part for most of us and our ability to respond to our customers.
We did see decreases in claims frequency and severity across the insurance industry, but that was only short-lived as people got back to work and on the road. I think the other dynamic was that courts were shut down, so many lawsuits were delayed, and they are now just being litigated. Given the rising inflation, the cost of those claims will undoubtedly be higher than what they would have been pre-pandemic.
Speaking of inflation, it is very real. Just go to the fuel pumps, food stores or look for services, and it is pretty stunning. I was one who had a 16% interest rate on the first home I bought, so perhaps I’m not as sensitive when I see mortgage rates at 7-8%; but as my children remind me, with the cost of homes also at historic levels, it is still not the same. The younger generations who thought they would own a home by now, are certainly having to think twice.
Unemployment is at historical lows so in order to attract talent, that too costs more. Wages are certainly up, but not as high as inflation. Those costs too are passed on to consumers.
The wind continues to blow, and Ian was a catastrophic event that created concern as insurance companies look to the Catastrophe Reinsurance market on renewals. As we saw with the Umbrella market, this impacts rates and capacity. It may take more insurance companies to insure a large building or schedule of buildings.
I know it seems pretty bleak, so where is the silver lining?
We have seen overall results improve dramatically over the last couple of years. And while frequency and severity are a concern on an industry level, at Mover’s Choice we have made significant strides to work with our brokers and insureds to continue to find ways to improve results. We have seen a moderation in rates, and that is good news. So, what else can insureds do to improve their results and better control their rates and premium?
I mentioned technology. The benefits of cameras and ELD are well known and the investment well worth it. The ELDs are of course required in most Class 7 and 8 Trucks, but the benefits of seeing the driving behavior of all drivers is untold, regardless of vehicle size. Coaching and mentoring, particularly of young drivers, is worth the cost.
Cameras not only help to prove you are not at fault, but even when your driver is at fault, you cut through a lot of arguments and greatly reduce the cost of handling a claim.
Consider various MVR pull programs for your drivers, so you are alerted when they have a violation. Again, coaching and mentoring before we get to a much more difficult situation is key. No one likes to see excluded drivers.
We know the difficulties in finding qualified drivers, and we applaud the efforts of the US Government to set up apprenticeship programs; and as a reminder, while that is being worked out, we have a program that will allow a 20-year-old driver to drive straight trucks. We have safety videos and programs to get them ready. We have many other tools on our site as well.
I think we can all agree the best accident is not having one at all. The soft costs to the business in time and effort, plus having a vehicle and driver off the road are immense. Let’s work together to keep these to a minimum.
With wishes for the happiest of Thanksgivings and the Holiday Season, thank you for your friendship and partnership!
Written By: Terri Moran
Terri’s career spans many years with roles in Leadership, Underwriting and Marketing. She was responsible for one of the largest Moving & Storage programs nationally, serviced by dedicated Moving & Storage brokers. In her spare time, in addition to enjoying her family, she is a member and Past Chair of the Board of Directors for the Surplus Lines Association of California.
