Hikes On The Horizon
Insurance Woes Worsen From Market Challenges BY JERRY LaMARTINA Insurance. Everybody needs it. Wisdom dictates having it tailored to your needs. But nobody wants to make a claim, both for the damage that requires it and the likelihood your premiums will rise if you do. For insurers, it means taking hits to their capacity to provide insurance and therefore to maintain their financial strength.
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nsurance rates have risen sharply the past few years in self-storage and across
the board. They promise to continue on that path, several industry experts say. They spoke with Mini-Storage Messenger about what’s causing it, its effects on insurers and insureds, how to mitigate its effects, and what’s likely in store in the short and longer terms.
Causes Of Rate Increases Self-storage insurance rates have been rising for the past two years, says Maureen Lee, president and COO of Indi- anapolis-based Xercor Insurance Services LLC. The property and casualty market generally has been hardening in the past several years, and it also has affected self-storage. The main causes have been catastrophic storms and wildfires in vari- ous parts of the country. COVID-19 and property damage caused by riots in some cities, especially in 2020, also contributed to the problem of growing losses for carriers.
Some insurance companies in Florida
and Louisiana, for example, have gone out of business after catastrophic (“cat”) events, she says.
“You hear everyone complain about
homeowners’ rates rising,” Lee says. “We’re not in a high-risk area, but because of the type of business we do, it’s a little harder.”
John Padgett, Xercor’s vice president
of operations, says theft in self-storage, likely linked to the economic slow- down, which COVID worsened, also has inflamed the problem. Lee says retailers in big cities, including Los Angeles, San Francisco, Chicago, Las Vegas, Dallas, San Antonio, Houston, and Baltimore, are suffering increased burglaries and thefts. Self-storage is also suffering from it.
Self-storage insurance premiums were rising 8 percent to 10 percent for a 40 August 2023 •
MiniStorageMessenger.com
few years, but those rates have jumped higher into double-digit increases in the past year from the prior year, says Cory Tiebout, chief growth officer for Phoenix- based Universal Insurance Programs. He also cites cat events as the main cause and notes that State Farm and Allstate recently stopped writing property cover- age in California.
Tiebout says inflation is another factor
pressuring insurance companies. Costs are rising for employees, everything involved in the claims process, and all other expenses. This means increased premiums to offset the hit.
Limits of coverage are also concerning
carriers, he says. They are looking more closely at whether they’re insuring at the proper amounts as costs and their losses increase.
A dollar of services in January 2020 cost $1.76 in April 2023, thanks to
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