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Navigating Thatch and Property Risk Coverage Renewals

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Over the past two years, insurers have faced unprecedented challenges, including reduced retention limits and some insurers exiting the hospitality insurance market entirely. This has led to a notable reduction in available capacity for certain business classes, including thatch and related property risks.

Understanding capacity

Capacity, in the context of insurance, refers to insurers’ financial ability to underwrite policies and cover potential losses. Insurance capacity is finite, meaning it is not unlimited. Insurers set aside a certain amount of capital to cover potential claims, and this finite capacity is distributed across various business classes.

Each insurer has a risk appetite, indicating the level of risk they are willing to assume. Factors such as market conditions, industry trends, and historical loss experience influence an insurer’s appetite for a particular class of business.

The reduced available capacity for thatch and related property risks results from industry-wide shifts in insurer strategies. Some insurers may have adjusted their risk appetite or reallocated capital to different classes of business, due to changing market dynamics or internal considerations.
As a result of the insurer exodus from hospitality insurance, a limited number of insurers are left who are willing to underwrite thatch and related property risks.

Impact on premiums

The principle of supply and demand plays a crucial role in insurance pricing. With reduced available capacity, the demand for coverage may exceed the supply, leading to an increase in premiums. Insurers price premiums based on the perceived risk and the finite capacity they have to cover potential losses, and as available capacity decreases, they may have to adjust premiums to reflect the increased risk and ensure the sustainability of their operations.

Due to the declining appetite for thatch and related property risks, rates have increased by a minimum of 20% and, in some instances, more. We understand this is a significant change but please be assured, we are committed to working with you to find the best solution.

Our team is already proactively working to tailor your coverage to mitigate the impact of these changes. We understand the importance of balancing comprehensive protection with affordability and are here to guide you through this process.

We understand that this adjustment may have been unexpected for our clients who recently renewed their policies and have already experienced the impact of increased premiums on their thatch and related property insurance.

To this end, in the coming weeks and months, your dedicated account executive will contact you to schedule a personalised consultation. This will allow us to discuss your current coverage, any changes in your business, and address questions or concerns you may have regarding the upcoming renewal.

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