Home insurance 'bubble' popping climate risks mount  September 21st 2023

Home insurance 'bubble' popping climate risks mount

Home insurance costs that have soared in much of the US may get even higher. 

Tens of millions of properties around the country are insured at prices that haven't caught up with the danger of hurricanes, wildfires and floods, according to a new report from the First Street Foundation, a nonprofit that works to define and communicate risks posed by climate change. 

First Street estimates that 39 million US homes are insured at artificially suppressed prices compared with the risk they actually face. Of those, nearly 6.8 million homes are covered by state-backed "insurer of last resort" policies. 

Hard Commercial Market Conditions Continue Driving Captive Formations

With hard market conditions continuing in the traditional insurance market, captive domicile regulators say new captive insurance company formations remain at a high level.

In Vermont, the biggest US captive domicile with 656 captives, 25 new captives have been licensed so far this year, with several captive applications now being processed.

"The activity is very healthy. The hard conditions in the traditional market are a driver for new captive formations," said Sandy Bigglestone, Vermont's deputy commissioner of captive insurance in the state's Department of Financial Regulation in Montpelier.

Captive formation growth also has been strong in other domiciles. For example, in Utah, 29 captives have been licensed so far this year, bringing its total captive count to 424.

Much of that growth is due to hard conditions in the traditional market making it "difficult for finding coverage at a reasonable price or even finding coverage," said Travis Wegkamp, captive insurance director with the Utah Insurance Department in Salt Lake City.

In North Carolina, about a dozen captives have been licensed so far this year, with 12 licenses pending, said Lori Gorman, deputy commissioner of the North Carolina Department of Insurance, Captive Insurance Division, in Raleigh.

"We crossed 300 this year, and that is a great milestone for North Carolina," Ms. Gorman said. Currently, North Carolina has 305 captives.

In Montana, 31 captives have been licensed so far this year, boosting the state's captive count to 283..

Hard property market spells 'turbulent times' for cannabis insurance

The hard market in property insurance, as well as regulatory and other challenges in the cannabis industry, are adding up to “pretty turbulent times” for cannabis insurance, according to one expert.

“While there’s a lot of optimism around New York, New Jersey and some of the momentum we’re seeing in the new cannabis markets in the East, the legacy markets, or the oldest, most mature markets for cannabis in the West continue to struggle,” said Norman Ives (pictured), cannabis practice leader and executive vice president with Amwins Brokerage, in Seattle, Washington.

Businesses in states such as Washington, Oregon, California, and Colorado that were early adopters of the adult-use recreational market are seeing price compression and downward pressure on their products, where supply far outstrips demand, according to Ives.

“That’s creating difficult business conditions on the operators, which is going to have an impact on their available funding and financing for insurance products,” he said.

Erie Insurance Future Focus program recognized among industry's 50 best internships for a third-straight year

The Erie Insurance (ERIE) Future Focus internship program has been named to the Rising Insurance Star Executive (RISE) list of the insurance industry's 50 best internship programs in 2023. This is the third consecutive year that ERIE has achieved the honor.

ERIE's summer internship program, which began more than 20 years ago, offers opportunities for college students to gain relevant and real-world business experience in the insurance industry and at a Fortune 500 company.

"We're excited that our Future Focus internship program has been recognized once again as a RISE Elite 50 best internship," said JR Wilwohl, talent acquisition partner and ERIE's internship program coordinator. "Our interns share with us that our program offers a remarkable experience in the industry, and this award is a further demonstration of how much our interns and the teams they work with are invested in each other's success."

ERIE's Future Focus program has helped launch the careers of hundreds of current employees and offers paid, competitive internships across many career pathways.

According to Jon O'Camb, talent acquisition manager, ERIE's internship program is one of the company's largest opportunities to attract early career talent and helps ERIE further its commitment to growing diversity within its talent pool.

"Our internship program is an extension of how ERIE values and celebrates diversity. Our talent pipeline is continuously growing through strong relationships with colleges and universities across ERIE's footprint and connections made through ERIE's affinity networks to help further reach candidates," said O'Camb. "Once interns are hired, we also provide them with multiple opportunities to get involved with our company's affinity networks, business resource groups and community outreach initiatives and encourage them to become active in community service projects during their internship."