Dealership Insurance – Looking Back at 2019
A reflection on the insurance industry in 2019 from President of Dealer
Risk Services, Steven P. Gibson.
As we near the close of 2019, there are some industry trends of note:
- Markets in Disarray
- Inventory Market
- Umbrella Market
- Premiums on the Rise
- Commercial Auto/Garage
First, let’s address the premium increases as this market segment is still “intact” and viable… just costing the Dealership more money.
A quick drive across any populated area, especially here in Florida, you’ll see a landscape frequented by billboards noting Plaintiff Attorney successes. The ads show clients holding up big checks and exclaiming glee with their settlements… often in the hundreds of thousands.
Unfortunately, these are not imagined successes, but dramatic recitations on the litigious nature of Plaintiff’s cases involving vehicles. And, while legitimate injuries deserve fair restitution, the “feeding frenzy” by the Plaintiff lawyers has a domino effect on insurance.
Relate these settlements to an actuarial analysis of Commercial (or Personal) Auto losses and you can easily see how premiums trend upward. Noting that Garage policies are a marriage of Commercial Auto and General Liability… the “cost” of Dealership insurance is on the upswing.
Property coverage, as we all know, is directly related to CAT (Catastrophic) claims. Whether caused by Acts of God or Acts of Man…if it burned down, was blown down, washed away or collapsed…it is gone! Losses in Property are reflected in the appetite of insurers and the available capacity to write business. Couple that with the ever-changing “modeling systems” used by the carriers, and we have some challenges to tackle!
Relate the afore-mentioned to the “Markets in Disarray” and note how our insurance industry begins to constrict within itself.
The Umbrella Market
Auto Liability rates on the upswing due to litigation and losses. Umbrellas that provide excess coverage over these exposures reacts accordingly. Today, Commercial Umbrellas have increased by 30% to 50%, and the primary layers (first $ 5M) have become genuinely problematic to secure.
The Inventory Market
Damage to vehicles, whether collisions or weather-related, are considered Property losses. So, the constrictions in the Property markets directly affect the already limited inventory market. Again, we see restricted or excluded coverage for the ever-expanding flood zones and carriers declining coverage within a certain proximity of the coastline.
The underwriting philosophies are, at times, almost maddening. They defy our levels common sense as industry carriers often require the movement of inventory away from safe Dealership locations to non-secure parking lots, often miles from the Dealership.
As a life-long Floridian and current coastal resident, I have to “chuckle” as the underwriting guidelines hit our desks. Disregard the hordes of Floridians clogging the road in evacuation mode, or the lack of Dealership personnel to move the units, or any concern for proper Key Control… MOVE THE UNITS, or you have NO COVERAGE!
Truly, sometimes it just makes no sense. Welcome to our world.
So, as we bring 2019 to a close and reflect on the challenges this industry has faced, we also reflect on our Blessings. Our nation is secure…our economy strong… and our future bright. The “issues” noted above are only that. An expense portion of the financial statements that we fume and fuss about…it’s only money…it’s only insurance…!
From all of us here at Dealer Risk Services and DRS Insurance Group, we wish you a Safe and Happy Holiday season. 2020 will bring it’s set of new “issues” but also a host of opportunities and Blessings.
All the Best from our firm to yours.
Steven P. Gibson
President, Dealer Risk Services