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Roy Neal Blog

All You Ever Wanted to Know About Insurance

Why did my rates go up?


This is a question we get asked, a lot.  To answer this question properly, we need to review the insurance market cycles. Insurance rates are cyclic, changing from soft markets to hard markets. Each cycle tends to last 3-5 years on average. Sometimes the cycles are longer or shorter depending on a variety of other market conditions.

A Soft Market

A soft market occurs when the losses are low, so the premiums tend to be low. There is intense competition within the carrier marketplace. You will tend to see more carriers entering the aviation or other business markets during these times. During this time it is easy to get quotes and insurance coverage, and the sky is the limit.  

A Hard Market

A hard market is when losses start increasing exponentially, to the point that the premiums carriers are receiving from customers are often surpassed by the claims being paid out (such as the recent snow storms in Texas and Oklahoma). During these market conditions you will see carriers starting to leave the market. Some even completely close their business, and others retract offerings for certain lines of business they no longer see as being profitable. During this time, it can be harder to get insurance coverage because the rates start increasing, and it is difficult to cover less experienced pilots.

The 2020 that Keeps Giving

In 2020 the market changed from a soft market to a hard one. Rates have been increasing, and unfortunately there is no end in sight for when rates will level off or start decreasing again. It is harder to attain certain types of coverage during this market, and most carriers aren’t willing to offer higher liability limits during these times. 

There have been numerous losses with the recent 737 Max crashes and the engine problems of the 777 aircraft. Let’s also not forget flooding, fires, hurricanes, tornadoes, and earthquakes that have caused millions of claims for damages. With insurance carriers experiencing these types of losses in all lines of business, we have seen dramatic increases, some as high as 85% from one year to the next. There have also been a number of carriers who have stopped writing certain lines of business, and many have non-renewed policies. 

What can I do?

You may be wondering what you can do. This is a perfect time to sit down with Jeremy, our Risk Advisor, to look at your business and/or personal lines coverage as a whole, and make sure you have a solid risk management plan in place. Risk Management is more than just insurance coverage. Risk Management considers your entire operational risks, and involves taking a measured approach to ensuring all areas of your life and business are adequately covered. If you have any questions about this process, or want to discuss your risk management needs, please reach out to us for guidance.