Discover innovative and affordable coverage solutions for wildfire, hurricane and flood, ideal for US commercial property insurance brokers and MGAs.

The increasing frequency and severity of natural catastrophes are placing unprecedented pressure on commercial property owners across the United States. From wildfires tearing through California to hurricanes battering the Gulf Coast, the risks associated with these events are intensifying. As a wholesale broker or Managing General Agent (MGA), you face the formidable task of securing comprehensive and cost-effective commercial property coverage for your clients amid a volatile and often unpredictable environment. In this article, we explore today’s catastrophe insurance landscape in the US, the challenges you face, and how Costero Brokers can support you and your clients in managing natural catastrophe risks.

The growing risks of natural catastrophes in North America

Natural catastrophes are a growing concern for commercial property owners in the US. The past decade has seen an alarming increase in the frequency of events such as wildfires, hurricanes, tornadoes, and floods. In 2023 alone, the US experienced 18 separate multi-billion-dollar weather and climate disasters (source: NOAA), continuing a trend that shows no signs of abating. These events are not only more frequent but also more intense, leading to staggering losses for property owners and insurers alike.

Recent years have been particularly challenging for the commercial property insurance sector in the US, with several high-profile natural disasters capturing headlines:

• California wildfires: Over the past decade, wildfires in California have caused over $70 billion in insured losses from 40 major wildfires. This has resulted in a 108 percent loss ratio for insurers in California, leading several to restrict wildfire coverage. (Source: Moody’s)
• Hurricanes Ida and Ian: Striking the Gulf Coast in August 2021 with winds exceeding 150 mph, Hurricane Ida caused severe flooding and wind damage across multiple states, including Louisiana, Mississippi, New York, and New Jersey. The storm resulted in more than $30 billion in insured losses. Even more damaging was Hurricane Ian, which hit Florida and South Carolina in September 2022, causing an estimated insured loss of $54 billion. (Source: Insurance Information Institute)
• Texas Winter Storm: The unprecedented cold snap in February 2023 led to widespread power outages and burst pipes, with commercial properties in Texas bearing the brunt of the damage. Insured losses were estimated at $10 billion. (Source: Texas Department of Insurance)

These examples illustrate the scale of the challenge facing the commercial property sector and the need for comprehensive insurance coverage to mitigate the financial impact of such catastrophes.

Catastrophe insurance challenges for wholesale brokers and MGAs

As a wholesale broker or MGA, you face increasing difficulties in securing suitable insurance cover for commercial properties in catastrophe-prone areas. The challenges are multifaceted:

• Coverage restrictions: Insurers are increasingly imposing restrictions on coverage for natural catastrophes, particularly in high-risk areas. For example, in wildfire-prone regions such as California, coverage for fire damage may come with stringent conditions or be excluded entirely. Similarly, in hurricane-prone states such as Florida, windstorm coverage is often subject to high deductibles or restricted limits.
• Premium pricing: The cost of insuring against natural catastrophes has risen sharply in recent years. Insurers are pricing in the increased risk, leading to higher premiums for commercial property owners. This can make it difficult for you to secure affordable coverage for your clients, particularly those with properties in high-risk areas.
• Available capacity: Insurers are also becoming more selective about the capacity they allocate to natural catastrophe risks. This has led to a tightening of the market, with some insurers withdrawing from certain regions altogether. As a result, finding sufficient capacity to cover large commercial property portfolios can be a significant challenge.

How we can help you mitigate your clients’ catastrophe risks

In this difficult environment, you need a partner who understands the complexities of the commercial property re/insurance market and can help you navigate its challenges. Costero Brokers offers a range of coverage solutions ideal for the needs of wholesale brokers and MGAs in the US. Our advantages include:

• Expertise and relationships: Costero has deep expertise in the commercial property insurance market, particularly in relation to natural catastrophe risks. Our strong relationships with the Lloyd’s of London market and other specialist London and Global re/insurance markets enable us to access unique and innovative cover solutions. We can help you secure the correct coverage for your clients.
• Innovative insurance solutions: We offer a range of innovative solutions, including parametric insurance, which provides quick payouts based on the occurrence of predefined events, such as hurricane wind-speed or wildfire burned area, rather than specific loss. This can be an effective way to mitigate the financial impact of natural catastrophes for your clients.
• Capacity in key areas: Despite the challenges in the market, Costero has access to significant capacity in key areas, including wildfire-prone regions of California and hurricane-prone states along the Gulf Coast. We work with a range of global insurers to ensure that we can provide the coverage your clients need, even in the most challenging environments.
• Quick response times: In the aftermath of a natural catastrophe, quick action is essential. Costero is committed to providing rapid response times, ensuring that your clients’ claims are processed quickly and efficiently. Our team of experts is always on hand to provide support and advice when you need it most.
• In-depth knowledge: Our team has a deep understanding of the risks associated with natural catastrophes and a significant portfolio of clients in the regions. We use this knowledge to tailor our insurance solutions to the specific needs of your clients, ensuring that they have the protection they need to stay resilient and protect their balance sheet.

Build stronger catastrophe protection for your clients

In a world where natural catastrophes are becoming increasingly common, having the right insurance coverage is more important than ever. As a wholesale broker or retailers, you play a crucial role in helping your clients protect their commercial property portfolios. At Costero Brokers, we are here to support you with innovative solutions, expert advice, and access to the capacity you need to secure the best possible coverage for your clients.

If you would like to arrange for a discussion and/or, send us your submission for a swift quote. To learn more about our solutions for commercial property insurance and to discuss your goals, please get in touch with our experts Nick Murrell, Cordelia Powell or Rob Withers at Costero Brokers.

Find out how you can benefit from Lloyd’s new fast-track coverholder approval process to achieve your insurance innovation goals.

The world of insurance is evolving rapidly, with Managing General Agents (MGAs) and InsurTech businesses at the forefront of this transformation. They’re driving innovation, introducing new technologies, and offering niche products that cater to the changing needs of the modern market. The global MGA market now exceeds $110 billion, with the US MGA market alone accounting for USD $90 billion of this. (Source: TheInsurer.com)

Facing your insurance innovation challenges

As an InsurTech or MGA, your journey to establishing a strong position in the insurance market is challenging. You’re a pioneer, exploring uncharted territories with innovative products and services in areas such as:

• Cyber / Tech Risk
• Professional Liability
• Management Liability
• Financial Lines
• Accident & Health
• General Liability
• Niche Casualty Lines
• Trucking – APD & MTC
• Commercial Property
• Affinity
• Parametric / Tornado / Flood
• Data Enrichment / Telematics

But as a trailblazer, your path ahead will be strewn with hurdles and pitfalls. Traditional insurance partners can be slow to appreciate your new ideas, and regulatory requirements can be daunting, especially for start-ups or companies looking to enter new markets.

One of the biggest challenges is accessing insurance capacity and gaining the trust of underwriters who may be wary of the risks associated with novel insurance products or emerging technologies.

How the Lloyd’s market can help you

For MGAs and InsurTechs facing these challenges around the world, the Lloyd’s insurance market in London provides a beacon of opportunity. Lloyd’s is renowned for its capacity to underwrite complex and unique risks, offering a level of expertise and security that’s unmatched globally. The market’s structure, which encourages innovation, speed, and value, is particularly attractive to businesses looking to expand their offerings and reach new customers.

At Lloyd’s, specialist underwriters assess risks and make quick decisions. This immediate access to decision-makers allows for swift solutions and makes it easier for brokers to facilitate the risk-transfer process between clients and underwriters. The market’s syndicates house a concentration of specialist underwriting expertise, making Lloyd’s a hub for innovative insurance solutions.

This has all contributed to Lloyd’s becoming the largest provider of capacity for US MGAs, writing USD $7.3 billion of premium in 2022. (Source: TheInsurer.com)

Discover the advantages of being a Lloyd’s coverholder

For your MGA or InsurTech business, becoming a Lloyd’s coverholder opens doors to a world of possibilities. “Coverholder” is simply the Lloyd’s terminology for a third-party company (such as an MGA or InsurTech) that has been authorised by the managing agent of a Lloyd’s syndicate to write policies on its behalf. The terms of this arrangement are set out in a “binding authority agreement”.

Once you become a coverholder, you can then write business backed by the Lloyd’s market, providing your customers with the assurance of the trusted Lloyd’s brand security and ratings. This status also enables you to offer a wide range of specialist classes of business, leveraging Lloyd’s global licensing capabilities to access markets in over 70 countries.

To underline the scale of the Lloyd’s coverholder opportunity, in 2023 Lloyd’s wrote £52.1 billion of gross written premium – and we believe about 40% of that was written through the 3000+ Lloyd’s coverholders in operation today. So that’s around £20 billion (USD £25 billion) of gross written premium provided through Lloyd’s coverholders across the world.

Putting Lloyd’s coverholder benefits into action

At Costero Brokers, our client Nirvana Insurance is just one example of an innovative MGA that has benefitted from becoming a Lloyd’s coverholder. US-based Nirvana focuses on providing coverage for connected operations, such as trucking and delivery fleets. They use advanced technology, including AI-powered insights, telematics, and continuous risk monitoring, to offer competitive and usage-based pricing. By becoming a Lloyd’s coverholder, Nirvana now has access to impressive capacity – and works closely with specialist Lloyd’s underwriters to enhance its innovative business model.

Find a faster route to becoming a Lloyd’s coverholder

However, until recently, the process of gaining Lloyd’s coverholder status was time-consuming and complex, often taking many months. This lengthy process deterred many potential coverholders, particularly in the fast-moving world of InsurTech, where speed to market is crucial. The traditional approval process involved multiple layers of scrutiny and compliance checks. While ensuring high standards, this also contributed to significant delays.

Recognising the need for a more streamlined process, Lloyd’s has recently introduced a new fast-track approval process for coverholders. This initiative is a game-changer for MGAs and InsurTechs, reducing the time required for approval from several months to as little as two weeks, once the full application is ready. The responsibility for final approval has been delegated to the managing agents of Lloyd’s syndicates, allowing for quicker decision-making and less bureaucratic red tape.

At Costero Brokers, we are uniquely positioned to help MGAs and InsurTech companies worldwide navigate this new fast-track process. As a specialist broker with extensive experience in the Lloyd’s market, we have developed a streamlined approach that ensures new coverholder applications proceed as quickly and smoothly as possible. Our team understands the unique needs of emerging risks for MGAs and InsurTech businesses and is committed to helping you achieve your goals.

Nurturing your unique vision for success

Costero’s expertise in placing binding authorities and programs is outstanding, proving particularly attractive for firms in North America and Australasia. We work closely with our clients from the early stages of designing a program and underwriting guidelines, all the way through to gaining Lloyd’s coverholder approval.

Our fastest coverholder approval to date was achieved in just two weeks, thanks to our close collaboration with Lloyd’s managing agents and our in-depth understanding of the approval process.

Once you become a Lloyd’s coverholder, our support doesn’t stop there. We continue to work with you to develop new capacity and product ideas as your program grows. Our team handles the ongoing broking administration and analysis of binding authority business, providing full technical support for contract preparation and maintenance, as well as claims support to assist with third-party administrators and insurers.

Achieve your insurance innovation goals with Lloyd’s and Costero

Your potential opportunities from becoming a Lloyd’s coverholder are immense. With Lloyd’s new fast-track approval process and the expertise of Costero Brokers, the journey to becoming a coverholder has never been easier or faster.

At Costero, we are committed to helping you fast-track your application, unlocking the benefits of the Lloyd’s market for your business. Whether you are an established MGA or upcoming InsurTech innovator, we have the knowledge, experience, and resources to guide you through the process and beyond. Partner with us, and take the fast track to success as a Lloyd’s coverholder.

To learn more about our services for MGAs and InsurTechs and discuss your goals, please get in touch with our experts Jamie Webb or James Gadbury at Costero Brokers.

Political tensions are running high. Regardless of where you fall on the political spectrum, it’s hard to deny that riots and protests have become a near-constant threat to businesses in many locations. Politically motivated terrorism and mass shootings are also an unfortunate possibility. Brokers can help their clients secure insurance coverage for such events and the resulting disruption.

A Culmination of Many Factors

Pinpointing a single cause for the current political landscape is impossible. Rather, there are many causes, including:

• The lingering socioeconomic impacts of the COVID-19 pandemic. This includes ongoing controversy over whether lockdowns and vaccine requirements were justified.
• The Russia-Ukraine war. The ongoing conflict has impacted supply chains and cybersecurity.
• The Israel-Hamas war. The ongoing conflict has led to pro-Palestinian protests.
• Climate change protests. Climate protestors have blocked roads and attacked works of art to try to increase awareness and spur action.
• Racial tensions and anti-police protests. Brookings estimates that 26 million people have participated in Black Lives Matter protests. According to Axios, protests following the death of George Floyd caused between $1 billion and $2 billion in damage, making it the most expensive protest in insurance history.
• Controversy over immigration policies. To name a few protests that have occurred over the past year, Le Monde says 75,000 people marched in France to protest a French immigration bill, NPR says anti-immigration protests occurred on New York’s Staten Island, and Euro News says anti-immigration protesters marched in Dublin.
• Highly divisive elections along with the recent conviction of Trump. PBS says threats against U.S. public officials have been increasing in recent years.

The Risk of Violence and Property Damage

As political tensions increase, so does the risk of violence and property damage.

Carnegie’s Global Protest Tracker shows that new protests occurred in 83 countries in 2023, including the U.S. Additionally, the Global Peace Index reports that the number of riots increased by 282% between 2011 and 2019, and the U.S. received a “medium” peace score.

Many are bracing for additional protests and riots in 2024 as the U.S. election heats up. The Council on Foreign Relations warns that there is a serious risk of extremist violence associated with the election, including pre-election attacks on candidates and post-election attacks on government buildings and law enforcement officials.

The Business Impact of Politically Motivated Attacks

When politically motivated attacks occur, individuals and businesses caught in the crosshairs may suffer.

• Injury and loss of life. These are the top concerns. Terrorist attacks and active shooters put people at risk. Serious injuries are also possible during riots and protests that turn violent.
• Property damage. Riots may involve broken windows, fires, and other acts of property damage, whereas terrorist attacks could involve bombings and other acts of large-scale destruction.
• Business disruption. Buildings may become inaccessible (or at least hard to reach) due to protests and riots, whereas terrorist attacks and active shooter scenarios may require closing off areas to the public. It may be necessary to cancel events.
• Increased operational costs. The need for increased security or adjustments to normal operations in light of property damage and business disruption can lead to higher costs.
• Employees, customers, and others may allege that a business did not take appropriate measures to ensure their safety.

Risk Mitigation and Crisis Management

In light of the current political climate, business leaders should consider mitigating their risks and preparing for a potential crisis.

• Create an emergency plan. Safety should be the priority. How would employees, customers, and others on the premises stay safe during an incident?
• Create a business continuity plan. Political unrest may interrupt business operations and interfere with profits. Consider how core business operations could continue and what resources you’d need, such as computer files.
• Consider increasing security. Depending on the location and nature of the business, increased security may be a good idea.
• Strengthen cybersecurity. Not all attacks are physical – cyberattacks are also associated with political and social motivations.
• Secure insurance. Insurance coverage can help with various costs associated with terrorism and riots, but it’s important to be aware of exclusions and determine whether additional coverage is needed.

Insurance Coverage for Terrorism and Riot Risks

Although insurance can help with costs related to terrorism and riots, many businesses may lack the coverage needed for these risks.

For example, the Terrorism Risk Insurance Act (TRIA) provides cover for certified acts of terrorism, but its limited scope can exclude other incidents as well as losses involving business interruption but not physical damage. The Terrorism Risk Insurance Act has never covered a single company from terrorism costs and has earned $40bn in revenue for insurance companies, however, Congress is reluctant to end it.

A standalone terrorism policy can provide more robust coverage while being equally cost-effective. However, standard terrorism policies may exclude active shooter incidents, so businesses may want to purchase this as a separate policy.

All-risks commercial property insurance may exclude damage from riots, especially if those riots are politically motivated, and if riots are covered, claims may trigger hefty premium hikes. Either way, carving out riot risks with standalone coverage may be a smart move.

Are you looking for insurance for your clients? Costero offers a wide range of coverage for property damage, business interruption, and liability indemnity. We can help you secure coverage for war, civil war, terrorism, riots, active assailants, event cancellation, and similar risks. Learn more.