WIN Magazine - Fall 2013 - (Page 16)
BY JIM CASSARA
R I T I N G
market is no
onslaught of natural disasters and
economic factors currently threatening property across the country, having a plan in place to review property
exposures is critical to maintaining
profitability in this line of business.
After several years of depressed rates
nationwide, and using longer periods
of sustained rate increases as a measure, research shows the market is
slowly firming. In preparation for the
hardening market, now is the time
to hone your property knowledge
to achieve optimal financial results.
Factors contributing to current difficulties in writing profitable property
business include catastrophe claims,
the increasingly combative legal environment and economic loss drivers,
such as increased frequency of arson,
copper theft and vandalism. Having
an awareness of the loss drivers is
critical in evaluating which of the
many coverage options should be considered. Industry standard options
such as Wind/Hail Deductibles,
Actual Cash Value options, Theft
Exclusions or company offered forms
addressing more specific concerns
such as Copper Theft Exclusions or
Limitations, can be considered when
crafting coverage offerings.
Let’s review some of the most rampant threats to property business,
along with underwriting considerations aimed to make writing property profitable.
VACANT BUILDINGS - BYPRODUCTS
OF TODAY’S TOUGH ECONOMY
The economic climate is affecting property owners more than ever.
Cutting corners on maintenance is
more prevalent and properties are
becoming run down more rapidly.
Vacancy rates in both habitational
and commercial structures across
the country continue to grow and
empty cities are becoming commonplace. The longer these properties sit
vacant, the more likely they become
an attractive nuisance. Vandalism
and theft increase, vagrants start
fires in or around the buildings, copper is targeted for theft, and moral
hazards can arise over time. Is there
a right amount of time to stay on a
vacant building? There is no magic
number, but having a vacant building checklist is important to profitable underwriting:
• Secure a fully completed application and review thoroughly.
• Verify length of the vacancy.
• What are the plans for the building? Renovations? Is it for sale?
• Review the crime index for
• Review financial information
• What protective safeguards are
in place? Is building regularly
inspected? Is there security?
• Obtain pictures to check condition of the building.
The moral aspects of human
nature play a large part in any
insurance decision but more so
when dealing with vacant buildings.
Determining the insured’s financial
status is an important indicator when
16 | v i e w t h i s i s s u e a t | www.aamgawin.org
considering their ability to maintain the premises both physically
and financially, until fully occupied
(e.g., taxes, utilities, permits, etc.).
For example: Functionally obsolete
buildings will remain so unless a
specialized tenant is found to occupy
the space that was designed for a
When properties remain on the
market for an extended length of
time, the moral hazards are potentially increased. Verify the following:
• Prior occupancy of the building.
• The likelihood a tenant will be
found in a reasonable amount
• If the cost to refurbish/build out
the property to appeal to a wider
market is feasible.
• Any major deficiencies with
the inspection and if so, is
the insured willing/able to
It is no longer necessary to base
underwriting decisions purely on
speculation, especially with the tools
available to us today. Pictures can be
sent instantly from the prospect’s cell
phone, and fairly current views of the
building’s physical condition can be
seen online. With today’s technology,
we are able to access multiple websites and virtually drive down any
given street to gain a fair representation of the risk and surrounding
neighborhood. Using what you “see”
is also a valuable underwriting tool.
Questions to consider:
• Are there multiple buildings for
sale or rent?
• Do the rentals create more competition or is this a sign the
Table of Contents for the Digital Edition of WIN Magazine - Fall 2013
Mind the “Talent” Gap: Attracting Students and Young Professionals to the Wholesale Insurance Industry
How We are Educating the Wholesale Insurance Industry Leaders of Tomorrow
Writing Commercial Property Insurance Profitably
When is an “Unoccupied” Home Really “Vacant?”
Successful Negotiating Skills for Wholesale Insurance Professionals
Writing the General Liability Line of Business
5 Metrics to Manage Underwriting Operations
ORSA: The Clock is Ticking
In the WIN-ner’s Circle
INDEX TO ADVERTISERS/ ADVERTISERS.COM
WIN Magazine - Fall 2013