As the commercial insurance market continues to harden — a time when premiums typically increase — having a trusted advisor to help navigate the waters is even more crucial than ever.
“Every business is unique. Every business has different risks,” said Randy Geving, co-founder of Six & Geving Insurance. “Our people are trained to look at your business and write the appropriate policy for that business. Having that trusted advisor is so important and the need for that will be long-lasting.”
The pandemic has led to increased rates and premiums within the commercial insurance industry, which was already experiencing a hardening of the market prior to the pandemic. That trend has continued, Geving said.
Insurance rates are up 4.8 percent overall for the second quarter of 2020, according to data provided by Six & Geving. Property insurance rates are up 5 percent, commercial auto rates are up 5.3 percent, and general liability insurance is up 4.3 percent, according to the data.
“For us, in El Paso County, our property insurance has been affected by the hailstorms that we have. It seems like a part of town gets hit every year by hailstorms, but not necessarily the same part of town every year,” Geving said. “That’s had a huge impact on commercial property insurance rates and the way companies are insuring commercial property.”
While rates are increasing, Geving said the biggest change is in deductibles. In previous years, a business may have had a $1,000 deductible for fires, vandalism, water damage, hail and other disasters. Now, wind and hailstorms are being subject to changes in deductibles with the deductible typically being a percentage of the building’s value.
“Say you have a $1 million building, and your deductible is now 1 percent, you’d be out $10,000 to meet your deductible now. And, 1 percent is really low. Most deductibles are somewhere between 2 percent and 10 percent,” he said.
Throughout the pandemic, Six & Geving has been considered an essential business and has remained open to help clients navigate the unpredictable times.
“There was a lot of uncertainty, and people had a lot of questions about their insurance,” he said.
Most of those calls, he said, were related to an interruption of business due to forced closures. That’s something commercial insurance doesn’t cover, he said, because it isn’t considered to be property damage. Loss of revenue, bankruptcy and other facts are considered to be a business risk that isn’t insurable, Geving said.
However, Six & Geving advisors have been recommending that businesses have liability coverage including cyber, workers compensation and other types of coverage to ensure they are well protected, he said.
Looking toward the future, Geving said he anticipates a new type of insurance coverage will be developed and offered to protect businesses from a pandemic in the future. Much like the events of 9/11 prompted the insurance industry to re-evaluate and offer terrorism coverage, the COVID-19 pandemic is having the same effect.
“The insurance companies right now are in the process of doing the actuarial work to see how they need to price that coverage. In the future we, as an industry, are going to have to offer a virus-type of coverage,” he said. “It will probably be very expensive because if there is another pandemic like this one, the insurance companies will be paying a lot of claims.”
Geving predicted that, similar to how terrorism coverage has been backed by the Federal Emergency Management Agency (FEMA), a future virus-protection insurance also would need to be backed by the federal government.
“I think we’ll see a very similar thing with virus protection in the future because it could be such a catastrophic situation that it would have to be backed by the government,” he said. “We’re going to see the impact of this for some years to come.”
Geving also anticipates the market will continue to harden and that the process of buying insurance will become more difficult as the insurance industry continues to feel the strain of the pandemic in terms of both the economy and the number of claims being processed.
“This is where having a trusted advisor is so important. We’re in a very unique time, a very difficult time, but there are professionals out there that you can call and that you can trust,” Geving said. “We will come alongside the business owners and decision-makers and help them be protected.”
To learn more about Six and Geving, call 719-590-9990 or visit six-geving.com.
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