Do you need to Rethink your Property Insurance in 2024

Picture this: You're walking through your office, greeting staff with a smile while mentally juggling a thousand responsibilities. The last thing you need is another worry about insurance premiums or coverage gaps. Yet here we are in 2024, facing a property insurance landscape that demands your attention.

After 24 consecutive quarters of rate increases, averaging 11% by the end of 2023, it's clear that the "set it and forget it" approach to property insurance no longer works. But there's good news on the horizon.

A Market in Transition: What It Means for Your Business

For the first time in six years, we're seeing signs of stability in the commercial property insurance market. However, this isn't your traditional market softening. Instead, we're entering what industry experts call a "nuanced recovery."

What does this mean for your senior living business? While rate increases are moderating for well-performing risks, those with significant exposures or sustained losses still face potential rate hikes of 50% to 100%. This stark reality underscores the importance of proactive risk management.

The Three Critical Challenges You Can't Ignore

1. The Rise of Secondary Perils

Remember when major hurricanes were your primary weather concern? Today's reality is different. Secondary perils – severe storms, flooding, hail, and freezing temperatures – are becoming major threats. These events, once considered minor risks, now account for more insurance losses than traditional catastrophes.

Consider this: The number of billion-dollar weather events has jumped from an average of 13 per year in the 2010s to 20 per year since 2020. For senior living facilities, which prioritize resident safety above all else, this trend demands attention.

2. The Reinsurance Factor

While 2023 saw the toughest property reinsurance market since Hurricane Katrina, 2024 brings cautious optimism. Reinsurance rates, which spiked up to 50% last year, are showing signs of stabilization. This matters because reinsurance costs directly impact your premium rates.

3. The Underinsurance Crisis

Here's a startling statistic: 87% of buildings are currently undervalued for insurance purposes. Even more concerning, 68% are underinsured by 25% or more. In the senior living sector, where resident safety and continuity of care are paramount, this gap presents an unacceptable risk.

Taking Control: Your Action Plan for 2024

1. Embrace Comprehensive Risk Assessment

Start with a thorough evaluation of your property values. In today's inflationary environment, last year's valuations likely don't reflect current replacement costs. Work with experts who understand both the senior living industry and property insurance to ensure accurate assessments.

2. Consider Alternative Risk Transfer Options

Traditional insurance isn't your only option. Consider:

- Captive insurance programs

- Parametric insurance for specific perils

- Self-insurance for certain risks

- Shared and layered programs

These alternatives can offer more control over your risk management strategy and potentially better cost efficiency.

3. Invest in Risk Mitigation

The best insurance claim is the one you never have to file. Consider:

- Upgrading building systems

- Implementing water detection systems

- Enhancing emergency response protocols

- Regular staff training on risk management

Your Next Steps

The property insurance market's evolution requires a strategic response. As a senior living operator, you need three things:

1. A clear understanding of your current risk profile

2. A comprehensive risk management strategy

3. A trusted insurance partner who understands the unique challenges of senior living facilities

Don't wait for your next renewal to start this conversation. The time to assess your property insurance strategy is now, while you have options and before you face a crisis.

The Bottom Line

The property insurance market is changing, but change brings opportunity. By understanding these trends and taking proactive steps, you can protect your facility, your residents, and your bottom line.

The key is working with partners who understand both the insurance market and the senior living industry. They can help you navigate these changes while ensuring you maintain the high standards of care your residents deserve.

Ready to take the next step? Let's talk about how we can help you develop a property insurance strategy that gives you peace of mind and lets you focus on what matters most – providing exceptional care for your residents.

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*Schedule a consultation with our senior living insurance specialists to review your property insurance strategy. Contact us at 541-954-0838 to get started.*