How the Covid Virus will impact Prospective Costs

While insurance companies adjust to the Corona Virus, and refund auto insurance premiums for vehicles sitting idle during quarantine, a bigger dynamic is already in the works.

All publicly traded insurers have watched their stock price drop from as little as 15% to as much as 40%. That pull back in equity price has a direct reflection on an insurer’s capacity to issue insurance policies, and then an insurer’s appetite to underwrite.

The capacity challenge will affect properties:

• coastal or proximate to water
• in flood zones
• in excess of 1,000 feet from a hydrant, or 3 miles from a fire station
• located in wildfire zones

We, as agents have already witnessed withdrawals of insurer’s from high risk areas and limitations on availability of coverage. Unfortunately, over the next 2-4 years this will put pressure on premiums for those at risk properties.

The lone type of insurer that should be unaffected by the pull back in the equity market is a Mutual insurer, or reciprocal, where the company is essentially owned by the insureds and not the stockholder. Our best guestimate is that over the next 2-4 years, capacity and then the resulting premium structure will be more stable with coverage with this type of company.

If you have questions about your insurance premiums over the next 2-4 years give Kyle a call at 203.698.9342 or kshepard@shepardinsgrp.com.