For the past three years, we have seen a hard market for insurance, and we are still in a hard market for the most part for nearly every line of insurance. This means that after two decades of largely flat insurance rates, premiums are increasing and capacity is decreasing, so it can be harder to get some things insured. Primarily, we have seen large increases in insurance payments for property damage as a result of natural disasters, for public entities after a rash of sexual abuse allegations and settlements, and in the area of cyber security with hacking and ransomware attacks.
When it comes to property and casualty insurance, catastrophic natural disasters and weather are the largest causes of damage for our clients. Overwhelmingly, the biggest event that has caused the most damage recently is hail – hail damage happens all over the country, and in many cases recently, in locations that had never seen hail before. Hail damage obviously affects both our personal property and auto segments, as well as our commercial customers. We have seen the biggest impact to our public entity clients – specifically schools.
While city and county buildings are usually maintained and in good order, school buildings are not always maintained as well as others, especially when it comes to roof repair. We recognize that schools often do not have the budget to replace the roof on every building when necessary, but the lack of roof replacement at the proper time results in the largest problems when natural disaster strikes. The number one thing that we recommend to our clients relating to preventing damage from natural disasters is to ensure that roofs are maintained. When a hailstorm hits, the roof takes the most abuse, and leaks in a roof lead to water damage, many times on gymnasium floors that are costly to replace. A recent hail damage payout in New Mexico was $20 million for a roof that was not properly maintained.
The most high-profile general liability insurance settlements in recent times have been sexual abuse claims. One of the most celebrated claims were for U.S. Olympians who were treated for injuries by Dr. Larry Nassar – settlements were in the hundreds of millions.
When it comes to property and casualty insurance, catastrophic natural disasters and weather are the largest causes of damage for our clients. Overwhelmingly, the biggest event that has caused the most damage recently is hail – hail damage happens all over the country, and in many cases recently, in locations that had never seen hail before.
Closer to home, recent settlements between accusers and school districts in southernCalifornia have been upwards of $100 million or more. All entities, whether it is the Boy Scouts of America, USOC, educational institutions, churches, etc., have all had to learn to manage sex abuse claims and do a better job educating employees and children at risk. Every entity that is involved with children in their custody or control has a danger of sexual abuse happening. Poms & Associates conducts training for our clients – including schools – to try to prevent abuse from happening and to help identify abusers. We also worked with the Governor and Legislature of New Mexico to pass a bill to prevent school districts or other entities from so-called “passing the trash” actions, where accused abusers are not prosecuted and can then gain employment in other districts where they abuse more kids. California passed a similar bill in 2019, and many states currently have proposals to do the same.
When it comes to trends in the market for the next year, one of the largest areas of concern is cyber security. Banks, retailers, credit card companies, school districts and hospitals have all had ransomware and hacking attacks on their computer systems, having to pay money or bitcoin to hackers to regain control of their systems. As we review renewals for our clients this year, we have asked our clients to start the renewal process at least six months in advance of renewal, due to the extensive testing needed to ensure that information technology systems are impervious to attacks and all possible prevention actions have been taken.
David Poms is president at Poms & Associates. Learn more at pomsassoc.com.
