What To Expect for Your 2023 Insurance Renewal

A deteriorating global economy, unprecedented inflation, war, and natural

disasters resulted in higher year-over-year insurance premiums in 2022. The good news is that while the habitational insurance market continues

to suffer, the outlook for 2023 is for a gradual easing of rate increases.

By category, here’s what we expect to see in 2023.

 By Alan Schreibman, ARM

PROPERTY

In addition to the conditions above, property insurance rates also have been significantly impacted by the rising cost of reinsurance (insurance the insurers buy to hedge against large losses). Consequently, insurers are closely scrutinizing property location, reported values and maintenance history as well as claims history. If you have a good loss history and are not located in a fire, wind, or flood area, expect a property premium increase of up to 10%. If you are in catastrophe-prone area, rate increases could reach 25% or more, even with good loss experience.

PRIMARY GENERAL LIABILITY

In 2022, general liability rates suffered from more and higher judgments as many courts reopened after COVID-related closures and related delays. Expect to see an increase in 2023 of 5-10% unless you have significant open claims, in which case rate increases could be much higher.

EXCESS LIABILITY

Excess and umbrella liability rate increases generally follow the general liability rate patterns. Since the 1990s, many HOAs have placed their umbrella coverage with group insurance programs. Those programs were harder to find in 2022, and the few markets that remain are expected to still be in turmoil in 2023. Higher jury awards are also a major factor in the shrinking marketplace. Expect 2023 premium increases in the 15-25% range for habitational risks insured by group insurance programs, and 5-10% increases for HOAs insured by single insurers.

DIRECTORS & OFFICERS LIABILITY

After a few years of steady increase, D & O rates have finally begun to drop, primarily due to decreased litigation, more insurers returning to and new insurers entering the marketplace. Expect a 5-10% increase in 2023.

CYBER LIABILITY

If your association buys cyber liability insurance, be prepared for a significant premium increase at renewal. Continued nationwide cybercrime and extortion claims are causing insurers to scrutinize both prospective and renewal accounts with a microscope. Unless there is a good cyber security program in place, associations that purchase this coverage may see 2023 renewal quotes that are 75100% higher than 2022.

WORKERS’ COMPENSATION

Workers’ compensation is the only area of coverage which has actually been seeing a decline in rates since 2014. This decline is expected through 2023, although the percentage of decrease should be less than over the past couple of years, as the market for this coverage may have finally bottomed out.

EARTHQUAKE

The current market for HOA earthquake insurance is unstable and unpredictable. Consequently, if you are considering buying or renewing earthquake coverage in the next few months, obtain multiple quotes with alternative limits and deductibles.

SUMMARY

For associations with favorable loss experience and outside a catastropheprone geographical area, expect a 5-10% increase in your 2023 insurance budget. Associations with modest claims but not in fire, wind or flood-prone areas might see slightly more of an increase of 10-15%. For insureds in a catastrophe-prone area, be prepared for a larger increase, mainly driven by increased property insurance rates, of 25-50% or more. Accordingly, start your renewal early by talking with your insurance agent or broker at least 60-90 days before expiration. Doing so will help avoid surprises, and give you time to obtain competitive bids, if needed. Ultimate pricing remains dependent on each association’s loss experience, location, construction, maintenance, and other factors, so individual renewal results may differ from projections described above.

Alan P. Schreibman, ARM is the founder and principal of Integrated Risk Management, a Culver City-based insurance and risk management consulting firm.