Insurance rates are rising and premiums are increasing | Hard market

Insurance rates are rising and premiums are increasing - this is known as a hard market. It is the cyclical opposite of a soft market when rates are decreasing.

The reasons for the hard market in the entertainment sub-sector are varied.

The COVID losses sustained by insurance companies resulted in larger payouts when film productions were suddenly shut down due to government edicts and live performances – theatre, dance, music were all forced to go dark.

There were four film and entertainment insurance companies at the start of COVID: Chubb, Reel Media/Allianz, Intact and Travelers. At the end of May 2020, Travelers elected to exit the film and entertainment insurance marketplace.

The film and entertainment claims in 2020 were 9x + what they would ordinarily be in a year. As a result, the insurance companies are raising rates and premiums – even for those companies that have no claims.

A “hard market” in the insurance world also means there is less appetite among the insurance companies to underwrite business and they will be more selective and will turn down more opportunities to quote.

Additionally, inflation is running at 5.7%. There are other areas that affect insurance rates that are running higher than that. For instance, construction repair costs are up. Vehicle repair costs are up. Geopolitical pressures such as the tragedy in Ukraine are disrupting supply chains and increasing costs. If damaged property that is covered by an insurance policy costs more to replace or repair, that is going to drive up the cost of insurance.

We expect more competition this time next year which should help lower rates; however, until then, we recommend starting the insurance quoting process early – 60 days prior to needing the coverage in place. The insurance company underwriters are busy quoting more risks than normal because everyone wants alternate quotes. Starting early will allow us as brokers sufficient time to solicit quotes from the marketplace to ensure that you are receiving the best price and coverage available.

About: Front Row Insurance Brokers Inc. is an independent insurance broker that specializes in the entertainment industry – specifically, the film industry. Front Row works hard to provide insurance protection for a very low cost. Should a claim occur, Front Row works diligently with clients and insurers to expedite the payment. Offices in: Vancouver, Toronto, Montreal, Halifax, NY, and LA.

Related: 

• Hard vs. Soft Insurance Markets Explained (with Video!)
• Front Row: We're a Broker, Not an Insurer
• Author: David Hamilton

Citations:

• How inflation could prolong the hard market
• Image credit: Photo by Chris Liverani on Unsplash

DISCLAIMER: Informational statements regarding insurance coverage are for general description purposes only. These statements do not amend, modify or supplement any insurance policy. Consult the actual policy or your broker for details regarding terms, conditions, coverage, exclusions, products, services and programs which may be available to you. Your eligibility for particular products and services is subject to the final determination of underwriting qualifications and acceptance by the insurance underwriting company providing such products or services. This website does not make any representations that coverage does or does not exist for any particular claim or loss, or type of claim or loss, under any policy. Whether coverage exists or does not exist for any particular claim or loss under any policy depends on the facts and circumstances involved in the claim or loss and all applicable policy wording.