The construction industry is facing its share of challenges lately. COVID-19-related shutdowns are causing ongoing product shortages. Supply chain disruptions are making it difficult to secure materials and leading to project delays. Soaring inflation is causing construction material prices to skyrocket by as much as 26.7%—which is having a direct impact on insurance.
As this article in Insurance Journal explains, the rising construction costs mean many Personal and Commercial Property insurers are raising their rates in response. According to a recent Moody’s Investor Service survey, Homeowners’ insurers expect to increase rates by approximately 7% this year—higher than the average 3-5% increase we’ve seen per year since 2015. Commercial Property insurers predict their rates will rise by 6.5% this year.
In response to these rising rates, there are concerns that:
- The above-average rate increases won’t be enough to offset the rising construction costs.
- Regulators will oppose the rate increases, especially for Homeowners’ Insurance in prior approval states.
- Insurance rate increases could negatively impact retention rates.
MiniCo’s underwriters stay ahead of the curve by keeping up with industry trends—like rising construction costs—and understanding the impact it may have on your client’s insurance policies. Our underwriting flexibility for risks such as self-storage operations, nonprofits and social service operations, artisan construction, agribusiness, and more will give your clients everything they need to secure the best insurance policy available. Contact us to get started.