Public sector organizations increasingly find themselves in an environment of shrinking budgets, staffing shortages, growing hostility and rising inflation. Educational institutions, law enforcement agencies and municipalities operate under a microscope different from those overseeing private companies. That means contending with intricate layers of administrative procedures ― particularly in matters related to financial decisions.
One significant expenditure that warrants careful consideration is insurance. Notably, public sector entities now confront the dual challenge of operating with reduced financial resources while grappling with escalating inflation and Property Insurance rates.
To navigate these complexities, adopt a proactive stance towards risk management and partner with a savvy broker.
Except for Property Insurance, the property and casualty market has stabilized for public sector accounts. Here are other notable trends, as discussed in Alera Group’s 2023 Property and Casualty Market Outlook:
Expect similar trends through the fourth quarter, with stabilized pricing for Cyber Liability and a deteriorated outlook for Property Insurance.
Pricing, capacity and underwriting have improved for Cyber Liability Insurance. Previously, public entities encountered substantial fluctuations in premium, often with double-digit increases and spikes as high as 35%. However, recent renewals mark a departure from the significant increases seen in past years, and new coverage pricing indicates a trend toward rate stability.
Public entities that proactively implemented cyber security measures and adopted multifactor authentication to safeguard sensitive and personally identifiable information (PII) are reaping the rewards of this positive shift. Conversely, those lagging in cybersecurity practices face challenges in obtaining coverage or adequate liability limits.
In a significant risk management development, the Biden administration recently held the federal government’s first-ever cybersecurity summit, focusing on the growing menace of ransomware attacks targeting public schools. This summit aimed to facilitate discussions on lessons learned from past incidents and examine best practices for safeguarding educational institutions. Findings revealed that numerous schools struggle with meager cybersecurity budgets and limited staffing resources, underscoring the urgency of bolstering digital defenses.
One of the most pressing issues faced by public sector entities is the significant increase in Property Insurance premiums. Some public entities have experienced double- and even triple-digit premium increases. While these surges can be attributed to various factors, including inflation and increased construction costs, they pose a significant financial burden on public entities. It’s crucial for insurance buyers to understand these dynamics and prepare for potentially higher Property Insurance premiums in the coming years.
Demand exceeds supply ― as Alera Group reported in our 2023 Property and Casualty Market Update ― and insurance carriers are hesitant to provide coverage at affordable rates for organizations with frequent or severe claims. This underscores the importance of effective risk management and loss prevention strategies, such as employee training, facility inspections, adherence to state-mandated regulations and property appraisals to verify insurance-to-value. Engaging in best practices can help mitigate risks, enhance safety and improve insurability.
The National Oceanic and Atmospheric Administration (NOAA) reports a staggering increase in billion-dollar-plus disasters, with 23 events occurring in the U.S. so far this year. The surge has set a record for weather and climate disasters, signifying a significant shift from the not-so-distant past, when catastrophic events such as wildfires and extreme weather were considered exceptions. In the previous five years, ALM PropertyCasualty360 reports, the national average for claims from catastrophic weather events was considerably lower, at $8.1 billion per year.
The shift has far-reaching consequences, particularly for insurance.
The exorbitant amount paid in climate-related claims affects insurer capacity and reinsurance markets. Ultimately, there’s a direct correlation between these disasters and every Property Insurance buyer, especially those in high-risk areas.
The cause of the Maui wildfires, estimated at $4 billion-$6 billion in economic losses, is still under investigation. Insurance Journal reported that the utility company identified Lahaina in the summer of 2022 “as one of the priority areas for prevention and mitigation” of fire but noted that the “request remains pending with the regulator.” Insurance Journal later reported, “The official investigations will aim to determine the cause of the fire and review how officials handled it.”
While official investigations to determine the cause of the fire and review how officials handled it are still underway, the county sued the for-profit utility, adding to a pile of lawsuits against the utility, the county and the state. The Maui disaster highlights the critical need for effective planning, collaboration and communication among public and private companies to protect communities.
Public sector entities face serious challenges beyond climactic events.
Take the case of Jackson, MS, which this year experienced a $2 million Property Insurance increase. This was the result of Liberty Mutual non-renewing the city’s policy due to a company-wide readjustment of municipal accounts and Jackson’s “failure to implement the risk control measures” recommended by the carrier. A new carrier offered coverage that exceeded the Jackson City Council’s budget by $2 million, putting additional financial strain on the city.
Funding has always been a challenge in the public sector, and rising inflation and insurance costs exacerbates the situation. With limited resources, tough decisions must be made.
As Dwight Eisenhower, Supreme Allied Commander of the Allied Expedition Force during World War II and a two-term U.S. president, was fond of saying, “Plans are nothing; planning is everything.”
When working with limited resources, start with these four steps:
For effective risk management, it’s advisable for public sector entities to engage in proactive short- and long-term planning.
To combat the increasing costs and challenges associated with traditional insurance, many public entities pursue alternative options such as captives and risk pooling programs, which can provide leverage to control insurance costs and coverage.
Some states and local public entities offer regulated pooling programs, with dedicated risk management departments and long-term loss control. This may include certified inspectors who visit onsite to review specific areas such as playgrounds, stadiums, laboratories and more. Members may receive compliance reports and SWOT (strengths, weaknesses, opportunities and threats) analysis from the risk pool managers. Insurance carriers may also offer additional risk management resources.
Public sector entities face many unique challenges, and the right insurance partner can make all the difference in managing risks effectively and ensuring financial stability. Consider these four factors when searching for an insurance broker:
It’s crucial for public sector entities to partner with brokers who can adapt to changing circumstances. By choosing a broker with a vested interest, keen assessment skills and a commitment to building a comprehensive insurance program, public sector entities can better face the challenges of limited resources while mitigating exposures.
For a broader look at navigating insurance market conditions, read Alera Group’s September 2023 Property and Casualty Market Update. The report provides valuable information on factors driving the current P&C market, with analysis categorized by lines of coverage, commercial as well as personal.
Rhonda Ross
Sales Executive
Propel Insurance, an Alera Group Company
Rhonda Ross has two decades of extensive expertise in insurance and risk management, with a focus on tailoring property and casualty programs for the unique needs of public sector clients. Rhonda collaborates with her clients to understand their exposures and operations, and guides them through a strategic decision-making process to prioritize coverage needs.
Contact information:
Think of implementing your organization’s employee benefits program as leading a marathon team. First, you prepare through regular training sessions, aided by internal communications in the weeks and months leading up to Open Enrollment. Next comes the grind of Open Enrollment itself — the equivalent of a marathoner’s high-mileage training runs. And then, the payoff: benefits utilization.
With Open Enrollment fast approaching, most of your prep work should be behind you. If all goes as planned, the enrollment period, though challenging, should run fairly smoothly. But what about the ultimate long run — the marathon of putting your organization’s benefits program to work? Are you and your team prepared for that?
Business leaders, HR professionals and team members responsible for employee communications are invited to join Alera Group on Thursday, October 19, for the next event in our Engage series of employee benefits webinars, "The Three E’s of Open Enrollment: Engage, Educate and Empower."
From 1-2 p.m. CT, we’ll provide guidance on enabling your organization and its employees to realize the full value of your benefits program and make your team’s marathon a success. There won’t be any finishers’ medals, but you will come away a better understanding of how to:
Employees may not remember all the information you provide leading up to and during Open Enrollment, but they should remember where to find it — provided you have the resources in place to serve team members of varying information-gathering preferences. (Regardless of age or occupation, not everyone runs with the same gait or at the same pace.)
For example, printed material may be preferable for some employees, while those who rely heavily on a mobile device may prefer an app as the primary source of their benefits information. According to a recent Benefits Pro article on the 2022-2023 Aflac WorkForces Report, however, while 82% of employees say it’s very or extremely important to manage their benefits online one-third of employers don’t offer online enrollment or benefits management.
Either way, employees should have at their disposal ready-made packages available for whatever benefit they need, be it mental health counseling, treatment of a critical illness, family leave or distribution of Life Insurance payments.
We’ll discuss such packages and much more during the October 19 webinar, which I’ll moderate, with my Alera Group teammates Rhonda Brown, Strategic Account Executive in our Tulsa, OK, office, and David Cagliola, President of Employee Benefits in our Berwyn, PA, location.
In the meantime, if you’re not where you’d like to be in your preparations for Open Enrollment, you may want to view two earlier Engage webinars: Streamlining Open Enrollment and 4 Practices That Can Make or Break Your Enrollment Communications. The Society for Human Resource Management (SHRM) is also a good source of guidance, including the August 2023 primer “How to Have a Successful Open Enrollment.”
And if you’d like to give your team an added, free benefit, invite them to view all or part of Alera Group’s recent 2023 Employee Wellbeing Fair, a recorded series of eight sessions on topics ranging from nutrition to how community culture affects longevity, from mindfulness to teaching children executive functioning skills, from personal finances to stress relief and more.
To ensure your organization’s employees get the most of the benefits program for which they’ll soon enroll, sign yourself up for "The Three E’s of Open Enrollment." You can access the brief registration form by clicking the link below.
Jennifer Bundy-Cobb, CEBS
Managing Partner, Tacoma, WA, and Anchorage, AK locations
Alera Group
Since joining Wilson Albers, an Alera Group Company, in 1995, Jennifer Bundy-Cobb has served in various roles, including Director of Employee Benefits, before her ascension to Managing Partner in 2022. A Certified Employee Benefits Specialist (CEBS) through the International Foundation of Employee Benefit Plans, she has served as the President of the Board for the Alaska Association of Health Underwriters and has been active in supporting healthcare reform causes.
Contact Information:
If your livelihood depends on providing professional services or counsel, Professional Liability Insurance is essential protection for your career and assets in case of mistakes or allegations of negligence. This coverage, which transfers reputational risk from the professional to the insurance carrier, goes by various names, including Miscellaneous Professional Liability Insurance, Errors and Omissions (E&O) Insurance, Malpractice Insurance and Professional Indemnity ― depending on the business sector.
Professionals such as doctors, lawyers, architects, engineers, accountants, realtors, consultants and brokers typically carry Professional Liability Insurance. Some professionals are legally obligated to secure coverage. However, anyone offering services for a fee can benefit from this protection, including those in administration, design, government, healthcare, marketing, media, printing, staffing and technology.
And right now it’s an increasingly buyer-friendly market. Insurers are eager to expand their Professional Liability business, particularly for attorneys, architects and engineers. New carriers have entered the market, intensifying competition. Despite fluctuations in previous years, rates have generally stabilized.
According to Business Research Insights, this coverage is expected to grow globally at a compound annual rate of 3.5% through 2028. This growth is attributed to the service-sector economy’s transformation and increased awareness about Professional Liability Insurance.
Earlier this month, Alera Group released a new 2023 Property and Casualty Market Update to share insights gained from July 1, 2023, P&C policy renewals. Here’s what we said about Professional Liability Insurance:
The phenomenon of “social inflation” – increasingly large jury awards in liability cases ― has driven claim-related expenses beyond the general inflation rate. This trend has also contributed to the rise in “nuclear verdicts” ― higher-than-anticipated court awards or settlements, often $10 million or more.
Architects and engineers are among the newly vulnerable. As an American Society of Civil Engineers legal brief notes, “Courts have been willing to find paths to keep design professionals in cases” in which they previously could “rely on contract provisions, or lack of privity, to avoid exposure and litigation costs.”
For attorneys, claim frequency remains stable, but claim severity has surged. PropertyCasualty360, in its coverage of an Ames & Gough survey of leading legal malpractice insurers, reported earlier this year that, “70% of the surveyed insurers had a claim payout of more than $50 million in the past two years, while three paid a claim in excess of $100 million and two saw claims of $150 million-$300 million.”
Traditionally, professional liability claims centered on financial losses stemming from errors or omissions. However, a new trend has emerged. The Insurance Journal article “Skyrocketing Bodily Injury Claims Spill Over to Professional Liability Insurance Market,” notes that after exhausting General Liability Insurance limits in a bodily injury case, claimants have started suing professionals over alleged negligence.
The article cites this real claim scenario: “A property management company was sued after someone was injured at an apartment complex they managed. The claimant successfully argued the property manager was negligent in maintaining the property, thus triggering the professional liability policy and a multi-million-dollar payout.”
Faced with escalating litigation costs and claim expenses, insurance underwriters are intensifying their standards, posing more detailed questions and meticulously assessing the quality of the businesses they consider insuring. Professionals seeking coverage should be ready to provide comprehensive information about their business practices and risk management strategies.
Here are five essential considerations when purchasing a Professional Liability Insurance policy. These factors can significantly impact your ability to respond to allegations of negligence. Understanding policy terms and conditions is crucial for making informed decisions about your coverage.
When selecting a broker, the first question to ask is, “How many clients do you have in my profession?” Ideally, the answer should exceed 100. Every profession comes with niche risks, such as missed statutes and conflict of interest claims for attorneys, or inadequate due diligence when selecting clients for architects. While a generalist may manage a small clientele in the same business class, insurance buyers often find specialists to be a more advantageous choice. Ask targeted questions to ensure that you’re entering the right partnership. A specialized broker will:
To protect your reputation and assets, partner with a tenured, specialized broker to expertly navigate the current Professional Liability Insurance market.
For a broader look at navigating insurance market conditions, read Alera Group’s September 2023 Property and Casualty Market Update.
Joel Jarvis
Property and Casualty Insurance Producer
Alera Group
Joel Jarvis specializes in Property and Casualty Insurance, with a strong focus on Professional Liability, Errors and Omissions, and Directors and Officers Liability Insurance for boards of directors and executives. With over two decades of experience, Joel has designed customized programs for attorneys and clients in the transportation, hospitality, nonprofit and construction sectors. His unwavering commitment to achieving success for his clients is evident in his win-driven approach. Joel strives to create environments where everyone thrives. Beyond his professional achievements, Joel actively contributes to nonprofit and legal organizations by serving on their boards and committees.
Contact Information:
Climate change is bringing more to the United States than turbulent storms and record-breaking temperatures. The striking shifts in our weather are also having a dramatic impact on personal lines of property and casualty (P&C) insurance such as Home and Auto — especially for certain states.
In California, for instance, the increasing frequency of forest fires, earthquakes, and other extreme weather has led some carriers to stop writing business, while others have dropped out of the state altogether. We’re seeing similar trends in Texas and Florida, which have also been hit hard by climate change.
Indeed, at least five large U.S. property insurers — including Allstate, American Family, Nationwide, Erie Insurance Group and Berkshire Hathaway — have told regulators that the effects of climate change “have led them to stop writing coverages in some regions, exclude protections from various weather events and raise monthly premiums and deductibles,” according to the Washington Post.
Other events in the news, such as the still-reverberating impact of COVID-19 and the ensuing fluctuations in transportation trends, are also impacting personal lines of insurance. It’s become clear that personal lines are extremely vulnerable to external incidents, trends and market forces. In a world that’s changing so dramatically every day, that could lead to an even more volatile market.
The effects are sadly predictable. In many places, prices are much higher — rates for personal lines of insurance increased by 12.8% in 2022, according to Alera Group’s 2023 Property and Casualty Market Outlook, and rates continued to climb in the first half of this year — and it can be difficult for some to even find a carrier who will insure their home.
When we look at the larger trends within personal lines, it’s apparent that the effects of climate change have the greatest impact. As Alera Group reported when we released the Market Outlook last winter, climate change is affecting Auto Insurance rates, Homeowners premiums and availability, and even degrees of underwriting scrutiny.
Our Property and Casualty Market Update, released earlier this month, reports the following on personal insurance coverages:
In addition to climate change, personal lines are still being buffeted by the reverberations of the COVID-19 pandemic. For instance, people may be returning to work, but they’re still hesitant to take public transportation. This has led to more cars on the roadways, which has led to more accidents.
Nearly 43,000 people died on U.S. roadways in in 2022, an increase of more than 6,000 deaths compared to 2019, according to the National Highway Traffic Safety Administration. NPR alluded to those statistics in its recent report “4 reasons why your car insurance premium is soaring.” The four reasons cited by NPR:
One of the effects of all this is that more carriers are pushing customers to move from standalone auto policies and toward bundled coverage. Indeed, some carriers have instituted a 10-day waiting period before they will issue a standalone Auto policy, which makes the process increasingly complicated.
As a result of this more intense market, insurers are raising deductibles in Homeowners and Auto policies from $500-$1,000 to $2,500-$10,000.
Another effect of this turbulence is that underwriters have become extremely picky in their vetting of potential clients. For instance, if someone incurred a water loss within the past few years, some underwriters will ask, “What did they do to mitigate future water losses?” Or if one family member has gotten into a few car accidents, carriers might try to exclude that driver from the Auto policy. Some carriers are even going so far as to say, “We don’t want to take on anyone who had a claim in the past.” And for existing clients, carriers are slapping new requirements on their Home policies.
We’re also seeing more interest in the realm of Umbrella Insurance, especially if there’s a home or an auto liability claim. Which brings us to one piece of good news here: Despite this turbulent personal lines environment, the costs of Umbrella coverage are staying largely steady, albeit with lower policy limits due to the increasing number of lawsuits and the severity of losses. Of course this can get expensive if people are covering multiple homes or multiple autos, and clearly the limit plays a role, but for the most part, we haven’t seen notable increases on Umbrella coverage.
Admittedly, this picture doesn’t present a particularly rosy outlook for customers. That said, there are things that homeowners can do to improve their chances of getting coverage.
In fire-prone areas, for example, owners can pursue fire-remediation efforts, such as including specific venting that will keep embers out of the home or using Class A fire-rated roofing products, such as composite shingles, metal, concrete or clay tiles. In other instances, homeowners can protect their property against the risk of an earthquake by installing a gas shock valve.
In some areas, these types of efforts will be enough. But in other places, such as around Lake Tahoe, underwriters are simply refusing to write coverage because of the location’s susceptibility to catastrophic loss.
That can lead consumers to the surplus market, where companies work with reinsurance carriers for third-party coverage of especially large claims. And if they can’t get coverage there, customers can look to state offerings, such as the California Fair Plan and Florida’s Citizens Property Insurance.
For a more in-depth look at strategies for navigating overall P&C market conditions, read Alera Group’s Property and Casualty Market Update. The report provides valuable information on factors driving the current P&C market, with analysis categorized by lines of coverage, commercial as well as personal.
A qualified agent or broker can help you navigate this complicated world with thorough, clear documentation of risk management programs, claim histories and financials. With more than 180 offices around the country, Alera Group combines local service with national reach and provides individualized, carefully crafted coverage programs that fit each client’s unique needs.
To get the full Market Update, click on the link below.
Chelsea Trenkwalder, CIC
Vice President, Private Client Group
Legacy Risk & Insurance Services, An Alera Group Company
Chelsea Trenkwalder has been with Legacy Risk & Insurance Services, An Alera Group Company, since 2012. Her responsibilities include helping clients protect their loved ones, homes, autos, collections and other possessions through personal insurance solutions.
Contact Information:
In a volatile Property and Casualty Insurance market, keeping up to date on pricing, availability and other variables is critical to your protection and your bottom line. That’s why Alera Group is releasing our Property and Casualty Market Update, an analysis of multiple lines of P&C coverage, with insights gained from July 1, 2023, policy renewals.
A follow-up to our 2023 Property and Casualty Market Outlook and March 2023 Commercial Property Update, this Property and Casualty Market Update is also a bridge to our next annual Market Outlook, which you can expect to see in December.
Why all the market reports? Because conditions change. Frequently. And sometimes dramatically.
Nowhere is this truer than with Property Insurance coverage. When Alera Group released its Market Outlook last December, for example, the full impact of Hurricane Ian on property claims had yet to be determined. With information gleaned from January 1, 2023, renewals, we were able to provide valuable information in the Commercial Property Update, which helped guide decisions on July 1 renewals. And on we go.
So, what are the key takeaways from our latest update? Even without factoring the impact of Hurricane Idalia’s August 30 strike on Florida and other parts of the Southeast, we know that Property Insurance continues to be increasingly challenging, especially in catastrophe-prone areas. But we also know that Property Insurance is an exception, with much of the P&C market showing greater stability.
Here are some highlights.
The Property and Casualty Market Update takes a deeper look at strategies for getting the best the market has to offer and provides a coverage-by-coverage analysis of the principal factors influencing the market. Understanding why conditions exist will help you decide what to do about them as you work with your insurance broker on designing the P&C program that’s best for you and your business.
Mark Englert
Executive Vice President/National Property and Casualty Practice Leader
Alera Group
Mark Englert has more than 30 years of insurance industry and related experience. As Executive Vice President and the Property and Casualty Practice Leader for Alera Group, he works closely with our offices across the nation to enhance client experiences, build out new capabilities and solutions, and coordinate services and resources.
For many human resource professionals, the post-Labor Day period leading up to and including employee benefits Open Enrollment is a time of dread. It should be a time of preparation. Do the hard work in September and October, and your organization’s Open Enrollment should run smoothly come November and December.
To help you prepare, Alera Group is hosting a September 21 webinar, Streamlining Open Enrollment, from 1-2 p.m. CT. Featuring Alera Group experts in HR, employee benefits, enrollment solutions and benefits technology, the webinar will assist you in doing all the advance work necessary to ensure you have in place the right:
Part of our Engage series of employee benefits webinars, the September 21 presentation follows two earlier programs on benefits design and communications, both of which are available in recordings: How Benchmarking Can Change the Game for Your Benefits and Your Business and 4 Practices That Can Make or Break Your Enrollment Communications. (As you can see, Alera Group takes Open Enrollment and benefits communications pretty seriously.)
As Vice President, National Benefits Technology and Services, I’ll serve as moderator for the upcoming webinar, joined by a panel that also includes three colleagues on our Employee Benefits team:
We’ll cover what you should have in place now and what you need to do over the next couple of months, enabling you to create a checklist that will limit, if not prevent, troubleshooting once your Open Enrollment begins.
Prior to Open Enrollment 2022, the Society for Human Resource Management (SHRM) published a comprehensive (i.e., lengthy) Open Enrollment primer the Society for Human Resource Management (SHRM) compiled in advance of last year’s enrollment season. If you’re looking for guidance in advance of the September 21 webinar, you’ll find it’s full of useful resources. Viewing those last two Engage webinars would be helpful as well.
But be sure to join us for Streamlining Open Enrollment. You’ll be happy you did – and your organization’s employees will be too!
Brian T. Parker
Vice President, National Benefits Technology and Services
Brian plays a key role in consulting with Alera Group clients and prospects, and in delivering outsourcing services and solutions. He has more than 30 years’ experience in strategic advisement and support for all aspects of benefits outsourcing and HR support.
Open Enrollment, the fourth-quarter period when employees enroll in employer-sponsored group benefit programs, is “crunch time” for human resource managers and their staff. At a time when HR professionals’ plates are full of end-of-the-year tasks, anxious coworkers pile on with 11th-hour questions about benefit offerings and how to enroll. The key to avoiding this problem — or at least mitigating it — is Open Enrollment communications.
Alera Group invites you to join us for the next webinar in our Alera Engage series, “4 Practices That Can Make or Break Your Enrollment Communications.” Scheduled for Thursday, August 17, from 1-2 p.m. CT, the interactive session will cover proven best practices for preparing employees to make informed decisions on your organization’s benefit offerings — without that dreaded deadline panic.
As the Society for Human Resource Management (SHRM) wrote around this time last year in an article titled “Open Enrollment Success Relies on Effective Communications”:
“The need for effective open enrollment communications has never been more critical — or more complicated, given the rise of hybrid mixes of remote and onsite work arrangements. This requires a renewed focus on developing communications that meet employees' needs wherever they are and whenever they need to connect.”
For us, meeting employees’ needs wherever they are means not only recognizing their work location — onsite, home or hybrid arrangement — but also where they are in their careers and lives. People have different learning styles and different preferred means of acquiring information, and often those preferences are related to age. With as many as five generations currently employed in the workforce, organizations must diversify their communications and construct them with two common traits: clarity and simplicity.
Our webinar will take that same approach, clearly and succinctly explaining the four practices we see as vital to the success of your Open Enrollment rollout and offering you the opportunity to contribute comments and questions. We look forward to having you join us on August 17.
Mark Crowley
Sr. VP, Global Communications Practice Leader
Blue Communications, An Alera Group Company
For nearly 20 years, Mark has worked with industry-leading companies across a wide range of industries to develop and drive innovative communications programs. He is passionate about helping organizations create communications campaigns that engage, inspire and educate employees, customers, partners and communities alike. Mark believes that great company cultures start from the inside out and has focused much of his career helping organizations find new and creative ways to build stronger connections with their employees.
Brenna Hansen
Director of IT and Communications
Granite Group Benefits, An Alera Group Company
As Director of IT and Communications for Granite Group Benefits, Brenna manages systems and communications, oversees the Employee Benefit Lounge (EBL℠) platform and optimizes electronic documentation and communication policies and procedures. She works closely with clients to tailor Granite Group's solutions to their technological needs and to deliver professional, custom-branded communications. She also leads Alera Group’s Communications Impact Group, which brings together thought leaders from across the nation to develop advanced strategies, ideas and solutions.
Denise Stefanoff
VP of Client Service Delivery, Employee Benefits
Alera Group
Denise became Alera Group’s Vice President of Employee Benefits Client Service Delivery in March 2023 after almost 10 years in executive positions with Benefit Advisors Network (BAN). She is responsible for leading her team of national account executives in providing outstanding client experiences to Alera Group’s clients while strategically developing and managing relationships with preferred carriers.
The phrase “Yes, Chef” holds significant importance in professional kitchens, originating from the military kitchen brigade system. It symbolizes order and discipline, instilling a structured approach to delivering an exceptional dining experience. Just as in the military, everyone in the restaurant kitchen knows their role, and all needs are covered. The phrase is also enjoying a pop culture moment, thanks to the hit FX TV show "The Bear" and the dark satirical movie "The Menu."
The “Yes, Chef” concept can be applied to restaurant insurance portfolios as well. Restaurants face various risks, ranging from kitchen fires to cyber attacks. To protect their business, restaurant owners need a comprehensive program of insurance policies to cover exposures. And as restaurants continue to evolve, insurance needs change too. Therefore, conducting a disciplined annual review is essential.
During the pandemic, the National Restaurant Association reported that many restaurants pivoted to stay afloat with creative solutions including expanded delivery services, outdoor dining, to-go alcohol offerings and technology investments. Many temporary solutions have become permanent, affecting insurance needs.
For example, if employees started driving their own vehicles for deliveries or business errands, the restaurant needs Hired and Non-Owned Auto Liability Insurance.
Overall, optimism abounds for the restaurant industry as the new normal moves full steam ahead. The food service industry is expected to continue growing in 2023, with the National Restaurant Association forecasting $997 billion in sales. In addition, the workforce is projected to add 500,000 new jobs, bringing total restaurant industry employment to 15.5 million in 2023.
Workforce shortages are the primary industry challenge, and the new Essential Workers for Economic Advancement Act creates a pathway to help restaurants find and hire qualified employees.
Menu price hikes have not deterred patrons. Similar to the travel industry, there’s a pent-up demand for the restaurant experience.
Emerging technology aims to automate various restaurant industry tasks, from administrative duties to guacamole production. Experts at the May National Restaurant Association Show foresaw managerial automation playing a pivotal role in shaping the industry’s future, including in the area of labor law compliance. This advancement is welcome relief for restaurant risk managers, as it helps prevent employment practices liability claims stemming from wage and hour disputes and other employment exposures.
Additionally, the debut of robots and AI innovations introduces new exposures that should be accounted for in the insurance program. Consider the proprietary Chipotle's “Autocado" robot, which, automates avocado cutting, coring and peeling, halving the production time for a batch of guacamole.
Wear your critic’s hat and perform an insurance review on your restaurant business. Verify valuations and perform a self-audit of sales and payroll before your insurance carrier conducts one. Sometimes when policies renew year after year, those numbers go unnoticed.
Reporting accurate numbers and underwriting information is crucial for several reasons:
When selecting policy limits, consider rising claim costs and settlements. For example, in the past six months, a McDonald’s franchise owner paid nearly $2 million to settle an EEOC sexual harassment lawsuit, and another franchise faced bodily injury liability when a McNugget burned a young child, resulting in an $800,000 jury award.
If anyone drives for the business, report each driver in all relevant policies and ensure that the Auto policy extends coverage for hired and non-owned cars.
Discuss the new tech trends you’ve adopted with your insurance broker, and adjust your insurance coverage accordingly.
Considering inflation and rising construction costs is vital when selecting Property Insurance limits. In the event of a total loss due to fire or other catastrophe, the cost to rebuild a restaurant today is significantly higher than in years past, making it essential to adjust replacement-cost coverage limits to reflect current market prices.
In December 2022, Alera Group released its 2023 Property and Casualty Market Outlook. Here’s what we said about the restaurant sector:
“The insurance market outlook for restaurants is likely to be stable for 2023. In most lines, price increases are rising at a slower rate. Some clients with good loss histories in non-catastrophe-prone areas will see rate reductions in some lines. Factors influencing the market:
Midyear, the most challenging market trend for restaurant insurance buyers pertains to Property Insurance. Workers’ Compensation, Employment Practices Liability and Cyber Liability Insurance are relatively stable and accessible for restaurants. Auto Insurance is experiencing a hardening.
Akin to a chef’s 10-course tasting menu, a restaurant insurance program comprises various coverages or “ingredients” that protect everything from Wagyu beef to customer credit card data. While some courses are easier to prepare than others, each plays an integral role in protecting the restaurant.
Today, the most formidable coverage is Property Insurance. Restaurant owners should expect diminished capacity, higher rates and stricter underwriting.
For upcoming renewals, start the process early. Consider any COVID-related pivots in your operations and assess the property and inventory valuations at today’s pricing. Also, it is crucial to grasp the shift in underwriting parameters compared to previous years.
Restaurants located in coastal areas and those with unfavorable loss experience will prove to be the most challenging.
Carriers are streamlining their books of business and gaining rate increases in other areas. Consequently, even if a restaurant has a positive claims history, favorable location and operations, the carrier may decline because the risk no longer aligns with the carrier’s underwriting guidelines. This underscores the importance of starting the renewal process early, as finding another carrier may become necessary.
Property Insurance is the line of coverage most vulnerable to unfavorable market conditions, followed by General Liability Insurance and Auto Insurance. In the past, carriers might have made exceptions, but nowadays they are either renewing with significant rate increases or opting for nonrenewal.
Also, carriers are now conducting more onsite building inspections than in prior years, scrutinizing risks that were previously renewed without much attention. Carriers are less willing to underwrite undesirable properties. Starting the renewal process early can mitigate surprises and grant restaurant owners time to implement improvements to increase favorability with underwriters.
Working with an experienced broker greatly increases the likelihood of comprehensive new coverage placement and program renewals. A knowledgeable broker can guide you through the process and will:
By partnering with the right broker, restaurants can navigate insurance complexities with confidence and focus their resources on serving their next meal. Bon appétit!
For a broader look at navigating insurance market conditions, read Alera Group’s 2023 Property and Casualty Market Outlook and our March 2023 Commercial Property Update.
With more than 130 offices around the country, Alera Group combines local service with national reach and provides individualized, carefully crafted coverage programs that fit each client’s unique needs. To contact an Alera Group agent or broker, click on the link below.
CONTACT AN ALERA GROUP SPECIALIST
Jeffrey Naber, CIC
Senior Producer
Lighthouse Group, An Alera Group Company
Jeff Naber, a Certified Insurance Consultant (CIC), brings more than 17 years of insurance experience as a trusted adviser. Specializing in property and casualty programs for restaurants, he helps his clients navigate the marketplace for comprehensive coverage and the best coverage terms to protect their restaurants and financial interests. Jeff also supports the claims management process, advocating for swift and fair claim closures with adjusters on behalf of his clients.
Contact Information:
At the peak of the pandemic in 2020, Alera Group recognized an urgent need among its business clients: a way to assist employees who were struggling with the physical, financial and mental health challenges COVID-19 had created. Our response was to host the first Alera Group Employee Wellbeing Fair, a series of webinar sessions designed to assist employees and help employers show they care.
In the years since, the pandemic has abated, but the need for employee wellbeing services persists – as does Alera Group’s commitment to providing such services. You and your organization are invited to join us on Thursday, September 14, from 10 a.m.-3:15 p.m. CT for the 2023 Employee Wellbeing Fair, which we’ve themed “You Owe It to Yourself.”
A Day of Quality Programming
Since its creation, we’ve streamlined the fair, condensing it from a series spread out over one week to a one-day program of informative sessions promoting all aspects of employee wellbeing – from employee and family mental health to nutrition, from community engagement to parenting neurodiverse children, from household finances to exercise, and more.
Here’s how the program shapes up (all times CT):
With the exception of the Sequence of Savings session, which will be conducted by experts from Alera Group’s Wealth Services team, session presenters are nationally recognized thought leaders from external organizations that specialize in their respective fields. For example, one presenter – Dexter Shurney, M.D., President of the Blue Zones Well-Being Institute – was the featured source of the American Medical Association article “6 lifestyle changes doctors wish patients would make.”
Valuable Offerings
Providing your employees with a program like this on your own could easily cost your organization as much as $10,000 or more. We’re offering it as a complimentary service, as we did in providing two other related resources:
Why do this? A recent Gallup study found that only 1 in 4 employees believe “My organization cares about my overall wellbeing.” We know you care about your employees; providing you with the Wellbeing Fair enables you to demonstrate that without having to break the bank.
In an article on a recent MetLife study of employee benefits trends titled “Who cares? Many employees don’t think employers care about them,” a MetLife executive tells the publication Human Resources Director America, “As the economy and labor market remain volatile and workplace trends fluctuate, employers can't afford to overlook employee care. When organizations genuinely demonstrate employee care, they are much more likely to weather macro challenges effectively and rise to the top for current employees and job seekers alike."
A one-day wellbeing fair isn’t in and of itself a solution to employee recruiting and retention challenges, but the diversity and quality of sessions you’ll find in our September event all but ensure you and your team will find value in the program. And that value should extend well beyond the day of the fair, thanks to offerings that can serve as foundations for long-term strategies and practices.
To access the registration page and share it with your employees, click on the link below.
EMPLOYEE WELLBEING FAIR REGISTRATION
Gretchen Day, MPH, MCHES
VP of Health Innovations and Advanced Strategies
Alera Group
Through her role at Alera Group, Gretchen Day satisfies her passion for public health by working with businesses and their employees to improve workplace culture and influence change in their healthcare delivery system. Ultimately, her goal is to help individuals access better quality healthcare, while advancing innovative thinking to bring about change in the way healthcare is delivered. Gretchen earned her Master of Public Health degree from the Penn State College of Medicine and Master Certified Health Education Specialist certification from the National Commission for Health Education Credentialing.
Contact Information:
Andrea Davis
Director of Wellbeing
Alera Group
Andrea Davis is a wellbeing consultant, and is certified as both a Thriving Workplace Culture Consultant and health coach. She has been supporting employers with their corporate wellbeing programs for more than a decade and brings extensive experience in management consulting and strategic solutions from her years at a Big 4 Firm and two large investment banks.
Contact Information:
In a chaotic time filled with environmental instability, global supply chain issues and perpetual labor shortages, there’s one industry that insurance companies still largely trust: manufacturing. As a result of the industry’s inherent stability, manufacturing is doing well in today’s property and casualty (P&C) insurance marketplace — for the most part.
We’re just not seeing the big fluctuations in manufacturing premiums because the industry offers the steadiness that insurance is looking for. If you’re in manufacturing, you’re in one spot, you’ve got four walls and a roof over your head, and you’re largely self-contained. Insurance people like the predictive nature of it; you’re making a product, and you know what your risks are. There’s an appeal to that.
That said, some coverage areas for manufacturers are more problematic when compared to 2022. For instance, Cyber Liability Insurance and Umbrella/Excess Liability coverage were difficult to obtain in 2022. Now, those areas aren’t as challenging; instead, they’ve been replaced as leading P&C challenges by Property Insurance and Auto coverage.
To gain a bigger-picture perspective on insurance within the manufacturing realm, let’s look at trends within this area.
In the area of Cyber coverage, years of global threats and archaic technology had previously combined to make it one of the hardest areas to cover. To address these issues and obtain Cyber coverage, organizations were compelled to make all sorts of remediation efforts, including extensive system improvements, heightened security measures, complex multifactor authentication processes and more.
Even then, Cyber coverage was so prohibitively expensive that some manufacturers didn’t buy it, reasoning that pricing was so expensive, they’d simply self-insure and pay for any loss themselves.
Now, however, cyber-risk management efforts have paid off, and Cyber coverage has done a total 180-degree turn. Manufacturers have done the work and put necessary security protocols in place, and the insurance industry has responded approvingly.
Similarly, what Alera Group stated when we released our Property & Casualty 2023 Market Outlook last December remains true today: Umbrella/Excess Insurance rates continue to rise but at a more modest level.
Other areas have come along to replace the once-problematic areas, with Auto as well as Property coverages more difficult to obtain.
Here’s why Property coverage can be vexing: Manufacturing’s infrastructure — i.e., large warehouses, factories and manufacturing plants — can contribute to its bedrock nature. However, it can be a curse for companies located within catastrophic areas such as Southeast Florida, the Gulf Coast or California. Climate change has led to more extreme weather across the globe, creating increasingly tenuous situations for businesses.
This recent NPR report focuses on the crisis in home insurance, but the insurance industry's reluctance regarding residential property applies to commercial property as well.
“Most insureds will face rate increases” in property coverage, Alera Group’s Market Outlook report notes. “Clients with properties in catastrophe-prone regions, and those who haven’t kept property values up to date, will see the biggest increases. Availability and capacity will be challenging in catastrophe-prone areas.”
That forecast has proven true, with property owners outside the most catastrophe-prone areas feeling the effects as well.
"If you're on the coast in Louisiana, you're on the coast of Florida, there's no question, you probably have some of the highest risk in the country," Rhode Island’s insurance commissioner, Beth Dwyer says in the NPR report. "But I hope that we've gotten to a point where it's not 'Hey, that's somebody else's problem.' Because it really isn't. It's going to hit everybody in every part of the country."
Similarly, Auto Insurance has become more expensive as vehicles have become more expensive and companies’ fleets have grown. That’s where supply chain issues come in: It’s become more difficult to get the parts and accessories manufacturers need to keep their fleets in good shape.
Manufacturing is also affected by workplace issues such as employee burnout, unfilled jobs, and undertrained and overstrained workers. In manufacturing, much of the work requires a great deal of skill — it’s not just sitting at a punch press and doing something simple. Jobs can take years to learn and master the skills, so it can be a challenge to attract people who want to do this work and also have the aptitude for it.
Environmental, social and governance (ESG) concerns also continue to loom in 2023. As the Alera Group Market Outlook notes: “Recent regulatory developments are forcing insurers to meet expectations with actions, especially on climate concerns. According to PWC, 88% of global insurers believe ESG will impact their underwriting strategies. From an insurance standpoint, it will become increasingly important for manufacturers to embrace more environmentally and ethically based business approaches to stay competitive.”
Other top insurance concerns among manufacturers, as detailed in the Market Outlook:
The manufacturing industry is a particularly complicated one, with variables ranging from workplace safety to global supply chain issues to labor shortages. While these factors can be complicated, companies can enhance their ability to get coverage simply by addressing relevant risk issues.
“When a client meets an insurer’s risk appetite, companies will compete aggressively for the business,” the Alera Group’s Market Outlook states. “Insurance companies want to know that clients have effective measures to avoid loss and recover as quickly as possible when events occur. In addition, it’s crucial that risk control plans keep pace with changes in the business.”
Alera Group includes specialists with expertise across manufacturing and can offer premium plans in Property & Casualty, Cyber Liability Insurance and more. With more than 130 offices around the country, we combine local service with national reach, providing individualized, carefully crafted coverage programs to fit your business’ needs.
To contact an Alera Group agent or broker about insurance for your manufacturing business, click on the link below.
CONTACT AN ALERA GROUP SPECIALIST
Christopher Breck, CIC, CRM
Senior Vice President, Property and Casualty
Alera Group
Chris Breck manages the day-to-day insurance and business needs of many of Alera Group Midwest’s longtime clients. His primary responsibilities include the design, marketing and implementation of commercial Property and Casualty Insurance programs. Chris specializes in delivering alternative risk solutions, including Captive Insurance programs. He maintains a broad industry focus, with clients in industries including manufacturing, service, retail, healthcare and nonprofit. He has been a licensed insurance producer since 1992, a Certified Insurance Counselor (CIC) since 1996 and a Certified Risk Manager (CRM) since 2010.
Contact Information:
