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.
