Back to Winter 2022 Issue

Targeting Mutual Success

Winter 2022 Issue

By Brett Daniels, Vice President of Reinsurance

2022 has been a difficult loss year for many of our client mutuals. Thankfully in the property and casualty world, we have the opportunity to start fresh every January 1. We won’t forget how awful 2022 losses were for many of our client mutuals, but we also have hope for a better 2023.

However, as we say here at WRC, hope isn’t a strategy. We need to plan for severe convective storms and non-weather-related perils to continue to occur at a heightened pace. We should move away from the notion that rough weather patterns in the Midwest will mean benign weather the following year and that Mother Nature has somehow gotten it out of her system. We must continue to plan for substantial losses.

What’s Ahead

I have hope for next year because of the conversations I’ve had with many of you. Most of our mutual clients have specific strategies for keeping pace with inflation. Mutual boards of directors and their managers also have been adapting their products and services for the post-covid world. Our mutuals are aware of any premium deficiencies they are facing and have a rate strategy in place to collect enough premium to cover anticipated losses next year.

In speaking with industry experts at conferences I’ve attended over the last few months, it sounds like we should anticipate another 8%+ replacement cost settlement inflationary year in 2023. Stack this on top of the 35%+ that we’ve already experienced on replacement cost policies in the last 24-month period and the average insurance carrier now needs close to 50% more premium dollars on risks than they did two years ago. That’s a tremendous need.

Rate adequacy is on the minds of many mutual managers, and on my mind too. We know we need to move quickly, together, but how? May I suggest a rate study with the WRC Mutual Assistance Team. We’ve developed a new, streamlined tool that quickly examines each mutual’s losses on a 10-year, five-year and one-year lookback period. We can help you develop a strategy that works for you. Let’s work together to get your book of business rate-adequate.

Goodbye, 2022. Hello, 2023 — we’re ready for you!