Wednesday, February 7, 2024

While January may have ended, 2024 is still just beginning, and so are the risks that your year might hold. One thing that’s certain is insurance is “in” in 2024. Our experienced client advisors gave their insights into insurance trends for this year across three different insurance lines.

Employee Benefits

Client Advisor, Chase Darnell, specializes in employee benefits. Here’s what he considers the ins and outs for EB this year.

In:

Medical Plan Transparency

Many small to middle market businesses are interested in gaining transparency into their renewals. This is achieved through different funding methods such as level-funded, self-funded, and different captives. By changing your funding method from fully insured, you get access to claims data that you can use to generate strategies to curb high pharmacy spend and reduce specialized facility usage.  Most employers in the small to middle market have the option now to pursue these different funding arrangements, whereas in the past they may have been denied because of their employee headcount.

Out:

Doing the BUCA (Blue Cross, United Healthcare, Cigna, Aetna) Shuffle

The BUCA shuffle is a term to describe when groups bounce from each one of these 4 companies year after year because of high renewals.  If your company is changing insurance carriers each year, then a better strategy needs to be developed between you and your broker, or it may be time to look elsewhere.  Anytime a coverage is placed, whether it be medical or ancillary, there should be a three-to-five-year cost containment strategy in place. Bouncing from carrier-to-carrier year after year to run from high renewals will be very expensive in the long run, and it will start to affect employee retention, as the employer will most likely have to start cost shifting to employees.  Employees don’t want to pay more of their paycheck for lesser benefits.

In:

FMLA, ADA, State Mandated Leave

There has been a giant push for companies to follow FMLA (Federal Mandated Leave Act) rules as they grow, and recoup employee headcounts post COVID. Being FMLA compliant doesn’t cost much, but if companies don’t follow the rules, they could face seven-figure fines in lawsuits. If you have 50 employees based at a single work location within a 75-mile range, talk to your benefits broker about FMLA compliance, ADA tracking, and managing leave offered through ancillary carriers and different payroll vendors. Using leave management technology, they can help you stay compliant with state mandated leaves if your employees live in states with statutory plans in place.

Out:

Antiquated Enrollment Strategies

There are too many carriers and too much technology in today’s marketplace to have bad communication with your employees about their benefits.  Almost every ancillary carrier or enrollment partner that brokers work with have bilingual, onsite, and call center capabilities to communicate benefits to employees and increase engagement.  Most benefit administration systems also allow for brokers and their enrollment consultants to make videos to attach to each benefit offered so new hires can continuously get a proper understanding of what they would like to select.  This is especially important in the communication of voluntary worksite benefits that employers offer.

In:

Telehealth Services

Post COVID there has been a huge push to start utilizing telehealth services to replace in-person visits for diagnosis.  In a recent Deloitte article, there are anticipated workforce shortages for clinical staff in 2024 leading to delays of getting in-person care. In the world of telehealth services, you can be prescribed and diagnosed virtual (often 24/7 care) with little to no cost to you or your employer.  This is compared to going to an urgent care, paying a copay or out of pocket until your deductible is met, and then getting balanced billed weeks later.  Companies that are educating employees on how to use telehealth are seeing lower monthly claim spend, which allows their broker to better position them when renewal negotiations arise.

Out:

Broker Complacency

As insurance brokerages continue to grow, service to small and middle market businesses tend to be delayed or outsourced.  The demand for account managers within brokerages is skyrocketing to keep up with service. This is leading to rushed annual strategy and delays in service-related issues, and it’s time to hold brokers accountable.  In 2024, ask the questions: When is the last time we did a compliance review? When is the last time we had a pre-renewal meeting before our renewal? What is the typical response time when I email questions or concerns? Am I still receiving the value proposition I was sold on (x) years ago? If your response is “My broker handles all of that”, that’s great, but nine times out of 10, a compliance review will find that something is slipping through the cracks.

Private Risk

When it comes to private risk, Client Advisor, Melissa Shine knows exactly what to look out for in 2024. Here’s what Melissa believes are the ins and outs of private risk insurance for the upcoming year.

In:

Private Flood

With the large rate increases that many homeowners are seeing with their National Flood Insurance Program policies, the private flood sector is growing quickly.  Private Flood can also offer higher coverage and more attractive terms.

Out:

Older roofs

Homeowners are being forced to replace roofs that are in good condition simply due to age.

In:

E&S Markets

Many standard homeowners’ insurance carriers have reduced exposure, tightened terms and raised rates.  Clients need to look at Surplus Lines markets for a possible solution.

Out:

Small Claims

Property and casualty loss costs are higher than ever due to inflation, national catastrophes, economic environment, and litigation.

In:

Auto Insurance rate increases

There were double digit increases throughout 2023 for most auto carriers, and it is expected to increase more in 2024. There are ways to reduce costs with a customized policy.

Out:

Reinsurance Renewal Pricing

Recent reinsurance renewals were more “stable and orderly” than in the previous year.

Property & Casualty

Client Advisor, Thomas Odom, can help to navigate the trends of property & casualty insurance. Here are Thomas’ P&C ins and out for 2024.

In:

Umbrella/Excess Requirements 

Out:

Umbrella/Excess Capacity 

It’s a perfect (liability only) storm. Owners, General Contractors, and 3^rd Party Compliance Companies are increasing Umbrella and Excess Liability requirements in response to the tough legal environment and frequency of claims breaching the $1,000,000 limits of primary coverage.

Insurance Companies are also responding to frequency of Umbrella claims and Nuclear Verdicts by reducing the amount of Umbrella/Excess they will offer. In recent years, placing a $5,000,000 or $10,000,000 Umbrella as part of your package was very common. Today you are likely to see multiple insurance companies writing a layer of the excess liability at these levels so that no single company is assuming liability for claims resulting in large judgements.

In:

Loss Prevention & Site Safety

The hard insurance markets for property & builder risk insurance have been challenging property owners, developers, and real estate deals for several years now as the increased costs cut into margins and test the feasibility projects or sales. Accessing the limited capacity of the best insurance programs is competitive, and taking additional loss prevention or control measures is required. Site security for builder risk has become an emphasis for underwriters. In addition to the traditional fencing and lighting, many insurers are now requiring motion detectors, temperature monitors and either on-site watchmen or a 3rd party monitoring 24/7.  For completed properties, the type of sprinkler system, freeze prevention and plans, 3rd party monitoring of alarms (fire and burglar) and fire walls or doors are critical to preventing/controlling losses. These extra steps can increase cost but prove to have returns in overall safety and improved insurance terms and pricing.

Out:

Liquor Liability

Recent liquor liability/dram shop claims have been hard to ignore in press and in our industry.  If you are placing or purchasing liquor liability, you have likely seen increased pricing, coverage limitations or sub-limits, and fewer standard insurers providing coverage.  Controls, claim history, and percentage of sales from alcohol will be scrutinized. It’s important for agents and owners to focus on server training, recognizing intoxication (whether drinks were served at your location or not), and having a plan to deal with issues once they are identified.