Property

PERMA group purchases commercial insurance for property, boiler & machinery, and pollution coverage on an All-Risk basis for property valued at approximately $1.6 billion. The program includes a $100,000,000 “All-Risk” limit, a $100,000 pool deductible (inclusive of member deductible), and a $10,000 member deductible (Palm Springs Tramway has a $50,000 deductible). Flood coverage, except Flood Zones A & V, which are not covered, is subject to a $100,000 deductible. Earthquake coverage is purchased separately on selected sites. For applicable Pollution coverage deductibles see policy. If you have any questions you can reach PERMA at info@permarisk.gov.

Property insurance rates continue surging in 2023-24

While it is too early to project expectations for the July 2023 renewals, the market continues to change quickly.  The major reinsurance renewal treaties took place on January 1st and this was the most difficult reinsurance renewal in years with rates significantly impacted and capacity affected in many areas.

With the mounting Hurricane Ian losses, and now large losses from the West Coast storms, it is clear that property rates are going to be hit hard with 2023 property renewals, worse than anticipated a couple of months ago.  The broker team has received word that the reinsurance renewals saw significant rate increases and reduced capacity (insurance limits offered).

• Article from Business Insurance “Property insurance rates to keep surging in 2023” (published January 10, 2023).
• MunichRe published its annual global catastrophe map for 2022.

It will be a difficult property renewal for even very good risks.  The landscape continues to change on a daily basis and while many of us were hoping for some relief, the market has other plans.

• Hurricane Ian:
  • 2nd largest event in history of CAT Property
  • Depending on source, estimated insured losses range from $50b – $65b
  • Natural catastrophes caused an estimated $115 billion of insured losses in 2022 to date, coming in well above the 10-year average of $81 billion
• Inflation/Valuation:
  • Often the number one component of the underwriting process. Markets are honing in more than ever and contrary to the beginning of the 2022, some are requiring a specific trend factor (varying by client)
  • It is becoming increasingly important to have values trended when first submitting into the market. Notes pertaining to the methodology behind how a buyer sets values can also be very beneficial, particularly for markets writing large accounts [Note: PERMA members’ property schedule is trended annually; property appraisals being conducted this year will also be viewed favorably by the market.]
  • Many markets are making an effort to purchase more reinsurance in light of the inflation, which has created further strain in the market
• General Capacity/CAT:
  • Some markets are leaning in, while others are backing out due to volatility and distrust in the tools available to help predict events
    • There has been an increase in both frequency and severity (NWS, Windstorm/Hail, Wildfire and Flood)
  • We will continue to experience carriers changing appetites (CAT and non-CAT), as well as changes to available capacity
• January 2023 Reinsurance Renewal:
  • A convergence of global events has led to the hardest property-catastrophe reinsurance market in a generation
  • The average global rate increases recorded at the renewals were +37% for global property catastrophe (the biggest year-over-year increase at 1/1 since 1992)
  • Reinsurance buyers sought to secure additional top-end cover in response to rising insured values and more premium entering the market, but these demand-side pressures coincided with a severe capacity crunch

Boiler & Machinery

The PERMA property program includes equipment breakdown/boiler & machinery protection for perils normally excluded under a property policy such as power surges, short circuits, mechanical breakdown and boiler overheating or cracking. This extends coverage to electrical systems, HVAC, refrigeration units, pressure vessels, computers and communications equipment, mechanical equipment, and similar risks. The program also provides for jurisdictional inspections as required by law. Cal-OSHA requires inspections on the following types of equipment commonly found at PERMA member agencies: air tanks, LPG propane storage tanks over 125 gallons, and high pressure boilers over 15 psig steam (these could be boilers, water heaters, air compressors, natural gas tanks and petroleum tanks). To schedule a free jurisdictional inspection (because your agency participates in PERMA’s property program), please follow the instructions on the flyer.

Infrared Testing

An infrared thermographic electrical inspection provides information on the condition of electrical equipment.  Faulty assembly/installation, loose connections, phase imbalance, overloaded circuits, faulty breakers, corrosion, and normal wear can be detected through infrared testing.  If undetected, these electrical issues can result in thousands of dollars in costly repairs, downtime, and dangerous failures resulting in fires and explosions.  The property program offers free infrared testing services to the members.  If your agency participates in PERMA’s Property Program, you can schedule one day of testing at your facility. This service is offered at no cost, on a first come, first served basis.  There is a limit on the number of service days available, so contact Kristi Loiselle at kloiselle@alliant.com or at (949) 260-5042 to schedule.

Online – Property Schedule Updates

PERMA members are able to update property schedules throughout the year through an online system – “InsuredID.”  Members were provided with login information and passwords. Any updates to the property and vehicle schedule, including additions and deletions, can easily be made online. Members are then able to receive real-time schedule adjustments and confirmation of the change(s). If a staff member at your agency needs access to make updates, please contact PERMA to have them added to the system.

• Buy something? Ensure it is listed so your agency has coverage.
• Sell something? Remove it from the schedule so your agency isn’t paying unnecessary premium.
• Is the COPE information complete? Carriers assume the worst, so your agency could be paying more if this information is missing. Construction Occupancy Protection Exposure (COPE) is a set of risks that property insurance underwriters review. COPE allows the insurer to evaluate the risks of insuring a piece of real estate, which will ultimately determine the ability to insure and if so, the cost of insurance
  • Construction: Frame, masonry, masonry veneer, superior construction, mixed masonry/frame
  • Occupancy: How the building is being used for commercial property, & whether it is owner-occupant or renter-occupied for homes, & the number of families for which the building is designed
  • Protection: Quality of the responding fire department (paid/volunteer), adequacy of water pressure & water supply in the community, distance to the strucdture to the nearest fire station, quality of the hire hydrant, and distance of the structure to the nearest hydrant
  • Exposure: Risk of loss posed by neighboring property of the surrounding area, taking into consideration what is located near the property, such as an office building, subdivision, or fireworks factory (source: https://www.irmi.com/term/insurance-definitions/cope)

Remember – your agency’s coverage and premium is determined by what you schedule.

Tutorials to update your schedule are located at the links below along with a training video. If you encounter issues, or would like additional training, please contact Katie Achterberg. PERMA members are asked to make schedule updates throughout the year, as property and vehicles change, to ensure the annual renewal submissions are accurate.

Report a Loss

AdminSure has been contracted to provide property claim handling services for PERMA members. Members are responsible for the following:

1. Timely and accurate claim reporting.
2. Reporting the loss, using the Loss Notification Form, as soon as possible.
3. Do not wait for a police report, repair estimate, or other documentation.
4. All claims must be reported, including claims with a value anticipated to be below the member deductible.
5. Within eighty (80) days from the date of discovery of loss or damage, the member shall file a sworn proof of loss.

AdminSure will report losses to PERMA’s carrier as necessary. According to the policy, notice is to be made as soon as practicable, upon knowledge within the risk management or finance division of the insured, that a loss has occurred.