Hikes On The Horizon
capacity issues. We can only write so many accounts in certain geographic areas. We pick the ones that are the best risk. What’s important is that they give as much information as possible to their broker. For example, maybe a facility is 20 years old but has had recent roof upgrades and security enhancements.”
Many owners will pass on their costs
to tenants, Anderson says. Larger busi- nesses and groups will often look for other cost-cutting measures first. Self- storage rates are rising so quickly to mitigate expected losses. Operators “either bank it up or protect against what they are already feeling right now.” Smaller operators are trying to increase efficiency with automation, call centers, and beefing up security at their properties.
“You suffer the most loss when you do not take care of your property and
The Crystal Ball “I don’t think there’ll be any relief this year,” Lee says. “Look at the property and casualty world in its totality.”
Lee cites Lululemon as an example.
The retailer’s policy is “don’t interfere if someone’s stealing, because our insur- ance covers it,” she says. The problem with allowing certain kinds of theft to continue while thinking insurance will cover millions of dollars of stolen merchandise every year is that it will affect everyone else in the retail market
upgrade it,” says Anderson. “So, the price is being passed on, but the way to mitigate it is to improve these factors. There are certain things you do in times of flush and times of famine. Owners tightening up their operations, securing their locations, and becoming as effi- cient as possible is the most important thing.”
who wants that coverage. Those retailers are not taking any measures to mitigate the risk.
“And the insurance company keeps
writing a check,” Lee says. “But at some point, that insurance company’s going to say, ‘You’re too high [of] a risk for us, and we don’t want you anymore.’ And when they quote other businesses, they’re going to look at loss history and say, ‘You have a high loss history.’ These things affect the market. In San Francisco, they’re closing stores right and left.”
Back to hurricane season, which
started June 1. Whether the ominous marketplace sky releases another deluge depends on whether this hurricane season will be as severe as in the past few years.
“But if the retail burglary trend and
the regional self-storage burglary trend continue—and if this is a harsh hurricane and wildfire season—then I don’t think 2024 is going to look any better,” Lee says.
Padgett agrees and says the politi-
cal climate and the way businesses are approaching these issues are also having an effect. But natural disasters are prob- ably a bigger factor.
Lee says cybersecurity insurance rates
will keep increasing as well because cyberattacks will continue. Xercor’s cybersecurity insurance rates rose 120 percent from 2022 to 2023. Padgett notes that more and more states are passing cybersecurity and privacy laws.
Tiebout thinks rough waters will
continue through the end of 2023 “at double-digit percentage rate increases.” If Mother Nature gets angry again this hurricane season, “it’ll make things worse and shrink the number of carriers that want to be in the marketplace.”
Schofield agrees that “the hard part is
the catastrophic element” because “cats drive a lot of what happens in the insur- ance industry.
42 August 2023 •
MiniStorageMessenger.com
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