January 4, 2024 • 23 mins
In this episode we attempt to unravel the complexities of Habitational property insurance with Daniel Ball, a Property Broker with CRC's Boca Raton, FL office and David Pagomian, President of CRC's Red Bank, NJ office. Join us as we traverse the labyrinth of skyrocketing property valuations and the resultant seismic shifts in coverage layers. The stakes have never been higher in 2023, with ITV rates soaring, and our guided discussion highlights the urgent need for carriers to preserve their ratings, which in turn dictates their risk appetite and participation.
We delve into the mission-critical role that CRC's team plays. Harnessing the power of data modeling and analytics, Daniel and David illuminate how finely-tuned loss limits not only satisfy lender demands but also keep premiums within the realm of possibility for property owners. Our conversation serves as a testament to the precision and innovation that defines CRC's approach, laying out a blueprint for retail agents and their clients to gain leverage in a market where only the resilient and inventive can truly thrive.
Visit REDYIndex.com for critical pricing analysis and a snapshot of the marketplace.
Do you want to take your career to the next level? Join #TeamCRC to get access to best-in-class tools, data, exclusive programs, and more! Send your resume to resumes@crcgroup.com today!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Scott Gordon (00:00):
Hello everyone.
Today, amanda and I are joinedby Daniel Ball, a property
broker with our Boca Raton,florida office, and David
Pagomian, president of CRC's RedBank, new Jersey office.
Amanda Knight (00:13):
This is the Placing you First podcast from
CRC Group.
Scott Gordon (00:16):
This podcast features news and insights from
a vast knowledge base of over5,100 associates who write more
than 35 billion in premiumannually.
Amanda Knight (00:26):
Plus, we give you the latest information on
what's happening at CRC.
This is the Placing you Firstpodcast.
David Pagoumian (00:33):
And now the hosts of the podcast Amanda
Knight and Scott Gordon.
Scott Gordon (00:37):
Yeah, thanks for joining us guys.
David Pagoumian (00:39):
Thanks for having us on, thanks for having
us Happy to be here and sharesome of our knowledge.
Amanda Knight (00:45):
We all know that property has been tough in 2023
overall and when you bringHabitational into it, talk to us
about what the market haslooked like this year.
Maybe give us one word orphrase that sums up Habitational
property right now.
Maybe, choose something otherthan dumpster fire.
But just let us know whatphrase would you use to describe
(01:09):
Habitational?
Daniel Ball (01:09):
Tumultuous yeah, good words.
Tumultuous, that's a good one.
I would say.
Challenging or stressful, thoseseem to be two of our buzzwords
around the office.
Amanda Knight (01:18):
Maybe all three together.
Yeah, challenging, stressful,tumultuous.
Scott Gordon (01:23):
Well, one phrase we've been hearing over and over
in relationship to property isinsurance to value.
Can we talk a little bit aboutthat?
Go ahead, Dan.
David Pagoumian (01:31):
Do you want to start?
Go ahead, yeah, yeah, I'llstart off.
Daniel Ball (01:34):
It's definitely been another one of those
buzzwords.
It's been the talk of everyinsurance carrier that we have
dealt with in 2023.
And it's been a challenge.
I think the stair step approachkind of got tossed out the
window because the valuationswere so low in the past couple
of years.
So we're seeing a huge jump innot a 5% 10% increase in ITV on
(01:58):
most of the accounts that I'mseeing.
We're seeing 50% to 60% bump invalues.
So you could be going from 90 afoot to what most carriers
minimums now are $125 a foot,which is it's a huge jump in TIB
and when you have a huge jumpin TIB it really changes the
account as a whole.
That could bring a $10 millionaccount where you had one
(02:23):
carrier giving you the full $10million to now a $17 million
account.
That requires this to now belayered, because that carrier we
did $10 million last year notonly can't do the full $10
million, now they can only do $5million and now I have to layer
12 million on top of it, justadding to the cost yet to add,
(02:44):
to add to what Dan's saying, alot of our senior partners at
these insurance companies areReminding us that they have a
company rating right.
David Pagoumian (02:53):
So a minus a 10 .
We have, you know, a financialcommittee that allows us to work
with these companies, and inorder for them to keep those
ratings, they have to go throughStress testing from the rating
agencies, and what that lookslike is they'll run a portfolio
Analysis and they'll hit thataccount.
(03:14):
That portfolio and an accountis an insurance company.
So pick your insurance companyABC.
They all have their ownportfolios and they all have to
withstand a Named storm and acalc quake in any given year,
and those are just two Realisticdisaster scenarios.
There could be convectivestorms in that as well.
(03:34):
So if these insurance companiesare not able to maintain their
rating, they can't play, theycan't participate, and the only
way to do to do a you know, aportfolio analysis Accurately is
if you have good data, you needthe right data, and if you
don't have the right values,then your portfolio is not going
(03:55):
to be as accurate as it wouldbe.
And so add to that modern daychanges in construction costs
and Post-covid rippling effectsthat we're seeing everywhere in
every industry, these insurancecompanies have to maintain their
rating, and so they'reparticipating on Habitational
risks now in small lines.
(04:15):
And so you know, springboardingoff of what Dan said, those
small lines have to all bebrought together.
A lot of them have minimumpremium requirements, they all
have scheduled limited liabilitylimitations and, of course, we
all know that the Habitationalbusiness has always been an
industry for insurance wherethere's been, you know, sort of
(04:38):
gamesmanship in the, in thevalues.
Now, not suggestinggamesmanship in the way of this
being deceitful, what I'mtalking about is my, my uncle's
a contractor and you know theycould help us build.
Everyone's got their story, youknow, and in that story you
know we saw evaluations comingdown to $80 a square feet, 90
(04:58):
dollars a square feet, and sothose have you know to what Dan
was saying have definitelysprung board.
You know, minimum ITV if you'renot at 125, no one's really
gonna look at you, and and ifyou're, if you're not doing this
, the underwriters are justgonna do it behind the scenes,
they're gonna true it up intheir systems and they're gonna
charge you for it.
Daniel Ball (05:18):
Yeah, and trying to try to line up to you know what
every like Dave was saying.
Every carrier kind of has theirown Portfolio and and their own
requirements.
So trying to line upeverybody's specific ITV
requirement Carrier A could have125, carrier B could have 135,
145 and when you're layering adeal that doesn't work, you need
(05:40):
to have all the carriers agreeto a specific valuation and,
honestly, you end up going withthe carrier who requires the
highest ITV if their pricingmakes the most sense and
everyone follows that.
Just adding to the cost.
David Pagoumian (05:53):
So we've been advising our retail partners on
anything habitational get it inearly, because there needs to be
data scrubbing something.
Our organization is, in myopinion, at the frontier of
using data as a wholesaler.
This is sort of a newfoundconcept and not newfound, but
(06:14):
it's still new.
We're still in our infancies ofwhat I know our organization is
aiming to do, and so havingthat vision of where we're going
with data gives our teams theability to be able to advise our
clients about this and helpthem take some of the anxiety
out of these placements.
(06:35):
Listen, you have also a class ofbusiness that has always been
very shoppy every year.
A lot of habitational risks.
Listen, they're all good.
I don't want to suggest good,but they're all ones that want
to develop a relationship.
And then there's all this no,we're just going to find the
cheapest quote.
Those we're going to find thecheapest quote, those are the
(06:56):
ones that are definitely gettingan education and I think
they're turning into those.
Hey, maybe we should startbuilding more relationships with
the insurance industry on atroubled class of business.
Amanda Knight (07:07):
Are you seeing anything else that's sort of
catching some attention as faras deductibles or types of
construction that carriers aretrying to avoid, anything that
we want to kind of put an alertout there about?
Daniel Ball (07:24):
Yes to all those.
I mean we could talk at lengthand I feel like we do talk at
length with our retailers.
But to David's point, the keyis getting it to us early so
that we can start developing aplan and start speaking to these
carriers, getting the ITVscorrect, getting a renewal plan
in place as early as possible sothat when we're delivering bad
news, or at least delivering badnews early so that people are
(07:45):
prepared and no one feels thisis coming out of nowhere.
But to Amanda, to your question, yes, we're seeing deductible
increases, we're seeing linesizes being cut drastically and
the biggest pain point that Ihave faced being down here in
South Florida and seeing a lotof frame and jam, and
specifically older frame and jam, is just the lack of carrier
(08:07):
participation on that class ofbusiness.
I think I had mentioned it inthe article where I once, when I
first started 10 years ago, weused to have 15, 20 carriers
quoting these deals five, 10million limit at a time, and it
was a lot easier to layer.
If you were even layering, itwas a lot easier to place these
deals.
(08:27):
Now I'm stuck with a handful ofcarriers, all of which have
strict restrictions on how muchlimit that they can deploy and
we're seeing deductibles vastlychange from what was once the
norm, right.
So a big thing that peopleoverlook is the change from a
per building to a per locationdeductible.
(08:49):
I mean, we do a lot of gardenstyle apartments down here in
Florida.
That is a huge change in yourexposure you are looking at
let's just use an example ofround numbers $10 million
apartment location where youhave $10 million building.
That 5% deductible, which wasper building, was $50,000.
(09:11):
Now that 5% deductible on a perlocation is half a million
dollars.
So you're, as an insured,taking a lot more risk and I
don't know that that'snecessarily sinking in with the
insureds and not that there'sreally another option.
Right, there's not reallysomeone else out there trying to
go back to the per buildings,so they're kind of stuck.
(09:34):
They're kind of stuck with that.
But that's the biggest painpoint I feel that we have is
just the lack of capacity oncertain classes of business.
David Pagoumian (09:43):
Yeah, I mean, look older construction you're
having a challenge with.
We're getting a lot of insuredsthrough our retailers.
Hey, we're getting ready to buythis portfolio.
Can you give us a range on thepremiums?
Right, and you're seeing some60s with not much update.
You know these are goingpotential aluminum wiring
exposure.
These are going well into youknow.
(10:05):
I mean some of the mostaggressive.
You know maybe 70 cents, butthey're going above a dollar
rate and now it becomes, youknow, how much limit are we
looking to buy?
You know a lot of companies aremaking sacrifices on limits, you
know, and they're working withtheir lending institutions.
Their lending institutions arebeing educated on what's going
on in the market.
But I know that you know ourcollective teams does a great
(10:29):
job doing due diligence and soyou really have the thing that's
changed.
Is you really?
You know, and this is where itfalls on our shoulders you got
to go everywhere becauseeveryone is changing their
appetite on on hab daily.
You know there was a few thatyou know weren't willing to
entertain aluminum a couple ofmonths ago.
Now they're willing toentertain.
(10:49):
You know this would be with theremediation in place and the
proper endorsements.
If you don't have it.
You don't have coverage.
You know establishing for ourside of the street it's
establishing a lead market.
There are still accounts whereyou know you're getting some of
these strong MGA's that we knowthat can still do 100% of the
primary limit, and then you knowthat makes it a lot more easier
(11:13):
, that's more efficient.
But most of the stuff is startsout with a lead player and then
you know, you know you're notgetting anywhere unless you
share that lead quote with thepanel and then you start to see
the program reveal itself.
It's getting somewhat morestabilized.
To say it differently, you know, I think that you know we're,
(11:35):
like you know, in my opinion, afive year hard market.
It's not a hard market, no more, it's just the market.
Right, this is the market we'rein and if you want to play in
it, you know there's this newcadence that you really have to
embrace and you knowHabitational is just one of
those sectors that is feelingthe pain.
There's many others as well.
Daniel Ball (11:55):
I think 2023 was a good, you know year where you
just cross your fingers and hopeyou got a renewal quote from
your incumbent carrier right, ifyou can get your renewal terms.
And you know it was a 35%increase in rate, but they still
gave you the same amount ofcapacity.
That was a huge win.
You know, even if they cut backfrom a 50 million primary down
(12:17):
to a 10 million primary, I meanthat was still a big win,
because the amount of carriersout there offering more than a
two and a half or a five milliondollar line is very minimal.
I think there's maybe two orthree.
So you were just really hopingyou got your renewal quote.
But what we were obviouslyseeing to kind of put the two
together, the ITV and therenewal terms was compounding.
(12:39):
Right, you saw a 45, 50%increase in ITV and then, off of
that ITV, you saw a 45, 50%increase in rate.
And the insurers are looking atone number, they're looking at
the premium and they're seeinghow that compares to what they
were paying last year.
And in most cases, in somecases, you were seeing Triple
digit increases, especially inhave and especially in South
(13:01):
Florida when it was, when it waslesser construction, you know
jam or frame.
David Pagoumian (13:06):
South Florida is its own market with have
because of the cat.
Yeah you know that that's itsown beast, not non cat have.
Yeah, you know is is a littledifferent, little different
genre.
Again, you have to really grindthe way on each of these deals
to demonstrate due diligence,because the pricing that you are
Going to give the client or thepricing that the market is
(13:28):
going to give you know a lot ofthis stuff.
It makes our job verychallenging because you know
we're powerless and that's toughfor us as brokers because we
want to please our insurers orretail brokers.
And you know, and it, you knowit, you know it is what it is,
it's not gonna fly.
You know you have todemonstrate that.
(13:50):
You rolled up your sleeves andthere's no hope here.
You got it.
We got to get the deal right.
We got to get the quote.
Mm-hmm.
I Think we need to write apiece on the anxiety of placing
to have a program.
Scott Gordon (14:05):
Yeah Right, it's its own thing, yeah.
Well and and okay, david, youmentioned South Florida is its
own world.
And, daniel, you're you're downin South Florida.
Yeah, david, you're up, you'reup there, yeah you're up there.
So let's talk about and we knowyou guys handle stuff from all
across the country, but in termsof your own particular
(14:26):
geographic locations, have youguys noticed any unique issues
cropping up in the hab propertymarket that we needed to talk
about?
David Pagoumian (14:33):
Yeah, I mean, you got wildfire, convective
storm, you've got cat wind,whether it's from Virginia all
the way up and around to Texas,and you know, and then you have
fire.
It's so, it's shaken andstirred in every peril, mm-hmm,
and, and that you know.
Add to it the proper ITVs forproper modeling, and then from
(14:54):
that are capacity providers thatwant to play, you know, and so
each of those is different.
You know, there's some marketsthat will write the wildfire,
some markets that won't, and soif you have a program that's got
some wildfire in it, youbifurcated, you separate it, you
place it separately, you treatthat cancer differently.
Daniel Ball (15:14):
Yeah, you know, down here, down here in South
Florida, I know I know it was afew years ago, but I mean surf
side is still fresh on on someof these carriers minds.
And for those who don't know,surf side was the Condominium
that collapsed down in MiamiBeach.
I mean, obviously, florida,being in South Florida, everyone
thinks of the wind and that'swhat's been that the hard right
for For a lot of years and stillis.
(15:34):
But that aop, the X windportion of these deals used to
be nothing, used to be five, tencents ground up.
Get as much limit as you want.
If it's a fire-resistant, Idon't care how old it is, well,
we'll do the whole thing for tencents, five cent.
And now that that has changed,that is drastically changed.
So you're, the wind is achallenge that I want to, you
(15:55):
know, emphasize that, that itremains to be a challenge.
But the X wind is no walk inthe park either, especially when
you have a lot of these olderhigh rises, right, I mean, you
saw what happened, that thatcollapses and it these carriers
don't forget about that.
So that that's definitelychanged, at least the X wind
side of it.
And and the wind still remainschallenging.
So you compile the two togetherand it's become, you know, a
(16:18):
perfect storm.
No pun intended, but you knowone thing CRC has has really
helped and David kind of touchedon it first earlier was Was
getting lenders to kind ofapprove loss limits, because
eventually you run out ofcapacity or capacity becomes too
expensive that it's notaffordable for these insured.
So CRC has done a very good jobwith the modeling team in
(16:40):
modeling air and RMS in order tojustify what limit an insured
should buy and that's not, youknow, a guarantee of if a storm
hits this, this is what it'sgonna cause.
But it's a really good toolthat we're able to use and share
to our clients, the retailersand them to share to the lenders
and the Insured to get some ofthese loss limits approved.
(17:01):
We're not we're not pickingthese limits out of thin air.
We're using data, we're runningmodels and we're using what the
underwriters use to price out adeal to also advise on what
limit makes sense for anindividual insured.
Amanda Knight (17:16):
You know, knowing that the market can be really
daunting right now, ortumultuous, or stressful, or
challenging whatever word wewant to we want to use how does
working with the right wholesalebroker, preferably team CRC,
make a difference?
We talked a little bit earlier,you know, about the data and
analytics we have through ourready platform, but we're also
(17:37):
more than than our platform.
We love it.
It's growing, it's expandingand becoming something that we
really hang our hat on.
But are there any otherdifferences that team CRC makes
for our retail agents and theirclients?
David Pagoumian (17:53):
I really do think.
You know I'm a big believer inexecuting the basics.
Well, you know, for me to havea platform where I could take a
spreadsheet, throw it throughand it calculates a lot of risk
calculation that I could sharequickly to make quick decisions
with clients and underwritersand colleagues on what their
thoughts are on the markets, andthen to also ask the machine
(18:15):
hey, which markets do you likefor this class of business?
You know I'm already at the 50yard line, right, and it's we
still got.
You know a whole much you know.
So it takes us very quickly toareas of qualifying, of getting
ready for pre renewal meetings,of being able to have really
deep, meaningful dialogue on ondata and what it means to that
(18:38):
specific risk.
And I think when you holdsomebody's hand that way, you're
showing them something thatthat truly or I don't want to
say you know it's rare, it'srare rur in the wholesale space,
right, we're almost meeting ourretail partners very closely to
where they operate and thenhanding off the ball at a very
(19:01):
close distance for them to speakwith their.
So we're taking a lot of thatfriction away that happens in a
trade with, with a lot of thesetools, right and so that's just
good basic blocking and tacklingwhich champions are made from
right.
So you know.
So, from that perspective, youknow, I've been living and
(19:23):
breathing that for a long time,so for me that's very meaningful
.
And, you know, if you'resomeone that's with our
organization, you have access tothose tools.
You know the world is youroyster, right.
I mean, you know you're, you're, you're your own entrepreneur.
You're, you're, you're the CEOof your team, of your space.
Daniel Ball (19:41):
Yeah, I think access is has been just a big,
you know access to product,access to tools like the
modeling I touched on earlier,access to carriers, right.
So, you know, I know a lot ofsmaller wholesalers or other
shops might not have access toevery market and I'm not saying
we have access to every marketavailable in in the country but
we have the big ones and we havethe main players in our Hab
(20:04):
space, right, the Hab space thatwe're on a podcast talking
about.
So we we are lucky to have, youknow, a leadership team that
that makes sure we have thecorrect appointments that allow
us to do our job.
We're using the data that wehave to try to create, you know,
new products, create capproducts, great needs, fill
(20:25):
needs in the marketplace,because there's there's just a
need for capacity right now.
And if we can somehow createcapacity, if we can take our
data and go to a insurancecompany and say this is what we
want to write, we want to writethis is, this is what we have,
this is the lost history.
You know that we've accumulatedover the years and help us do
the, help us create a program.
(20:46):
That's really big right now andthat's a really good talking
point to make to our retailersin a really competitive
marketplace to be able to tellthem that we have access to all
these products, and not only allthose products, but exclusive
products that we can use to helpsave your insurance money.
And that's how they win dealsand, you know, form build
(21:07):
relationships.
So it's a big, it's a big toolto have access, or it's a big,
you know, luxury to have accessto all the markets that we do.
Scott Gordon (21:15):
Well, david and Daniel, thank you so much.
This has been great.
You can get up out of yourchairs and wait.
No, there's something else wedo at the end of the podcast.
Sorry, you can't leave yet I'vebeen standing.
This is something we like tocall rapid fire.
Amanda Knight (21:32):
All right, let's go.
Scott Gordon (21:33):
If you could have an unlimited supply, an
unlimited supply of one thing,what would it be?
Daniel Ball (21:38):
Talent capacity for a frame and jam construction.
Amanda Knight (21:42):
Oh man, I think that's a pipe dream.
Ok, and one more what?
Scott Gordon (21:46):
what item is worth spending more money on?
Don't go cheap.
Amanda Knight (21:53):
You don't buy generic something you splurge on
.
Sushi.
Oh yeah, I could see cheapsushi could be a bad idea.
David Pagoumian (22:00):
I want cheap sushi.
Well, you can eat sushi.
Daniel Ball (22:04):
No golf courses.
I can't stand a really poorgolf course.
You don't want to hit a cow,right?
Yeah, you want nice greens, youdon't agree?
Amanda Knight (22:13):
Well, Dave and Daniel, thank you so much for
taking time out of your day tojoin us.
If you're a listener, thank youfor joining us as well.
Providing current insights intothe marketplace is just one
more way CRC Group is placingyou first.
We'll see you next time.
Hello everyone.
Today, amanda and I are joinedby Daniel Ball, a property
broker with our Boca Raton,florida office, and David
Pagomian, president of CRC's RedBank, new Jersey office.
Amanda Knight (00:13):
This is the Placing you First podcast from
CRC Group.
Scott Gordon (00:16):
This podcast features news and insights from
a vast knowledge base of over5,100 associates who write more
than 35 billion in premiumannually.
Amanda Knight (00:26):
Plus, we give you the latest information on
what's happening at CRC.
This is the Placing you Firstpodcast.
David Pagoumian (00:33):
And now the hosts of the podcast Amanda
Knight and Scott Gordon.
Scott Gordon (00:37):
Yeah, thanks for joining us guys.
David Pagoumian (00:39):
Thanks for having us on, thanks for having
us Happy to be here and sharesome of our knowledge.
Amanda Knight (00:45):
We all know that property has been tough in 2023
overall and when you bringHabitational into it, talk to us
about what the market haslooked like this year.
Maybe give us one word orphrase that sums up Habitational
property right now.
Maybe, choose something otherthan dumpster fire.
But just let us know whatphrase would you use to describe
(01:09):
Habitational?
Daniel Ball (01:09):
Tumultuous yeah, good words.
Tumultuous, that's a good one.
I would say.
Challenging or stressful, thoseseem to be two of our buzzwords
around the office.
Amanda Knight (01:18):
Maybe all three together.
Yeah, challenging, stressful,tumultuous.
Scott Gordon (01:23):
Well, one phrase we've been hearing over and over
in relationship to property isinsurance to value.
Can we talk a little bit aboutthat?
Go ahead, Dan.
David Pagoumian (01:31):
Do you want to start?
Go ahead, yeah, yeah, I'llstart off.
Daniel Ball (01:34):
It's definitely been another one of those
buzzwords.
It's been the talk of everyinsurance carrier that we have
dealt with in 2023.
And it's been a challenge.
I think the stair step approachkind of got tossed out the
window because the valuationswere so low in the past couple
of years.
So we're seeing a huge jump innot a 5% 10% increase in ITV on
(01:58):
most of the accounts that I'mseeing.
We're seeing 50% to 60% bump invalues.
So you could be going from 90 afoot to what most carriers
minimums now are $125 a foot,which is it's a huge jump in TIB
and when you have a huge jumpin TIB it really changes the
account as a whole.
That could bring a $10 millionaccount where you had one
(02:23):
carrier giving you the full $10million to now a $17 million
account.
That requires this to now belayered, because that carrier we
did $10 million last year notonly can't do the full $10
million, now they can only do $5million and now I have to layer
12 million on top of it, justadding to the cost yet to add,
(02:44):
to add to what Dan's saying, alot of our senior partners at
these insurance companies areReminding us that they have a
company rating right.
David Pagoumian (02:53):
So a minus a 10 .
We have, you know, a financialcommittee that allows us to work
with these companies, and inorder for them to keep those
ratings, they have to go throughStress testing from the rating
agencies, and what that lookslike is they'll run a portfolio
Analysis and they'll hit thataccount.
(03:14):
That portfolio and an accountis an insurance company.
So pick your insurance companyABC.
They all have their ownportfolios and they all have to
withstand a Named storm and acalc quake in any given year,
and those are just two Realisticdisaster scenarios.
There could be convectivestorms in that as well.
(03:34):
So if these insurance companiesare not able to maintain their
rating, they can't play, theycan't participate, and the only
way to do to do a you know, aportfolio analysis Accurately is
if you have good data, you needthe right data, and if you
don't have the right values,then your portfolio is not going
(03:55):
to be as accurate as it wouldbe.
And so add to that modern daychanges in construction costs
and Post-covid rippling effectsthat we're seeing everywhere in
every industry, these insurancecompanies have to maintain their
rating, and so they'reparticipating on Habitational
risks now in small lines.
(04:15):
And so you know, springboardingoff of what Dan said, those
small lines have to all bebrought together.
A lot of them have minimumpremium requirements, they all
have scheduled limited liabilitylimitations and, of course, we
all know that the Habitationalbusiness has always been an
industry for insurance wherethere's been, you know, sort of
(04:38):
gamesmanship in the, in thevalues.
Now, not suggestinggamesmanship in the way of this
being deceitful, what I'mtalking about is my, my uncle's
a contractor and you know theycould help us build.
Everyone's got their story, youknow, and in that story you
know we saw evaluations comingdown to $80 a square feet, 90
(04:58):
dollars a square feet, and sothose have you know to what Dan
was saying have definitelysprung board.
You know, minimum ITV if you'renot at 125, no one's really
gonna look at you, and and ifyou're, if you're not doing this
, the underwriters are justgonna do it behind the scenes,
they're gonna true it up intheir systems and they're gonna
charge you for it.
Daniel Ball (05:18):
Yeah, and trying to try to line up to you know what
every like Dave was saying.
Every carrier kind of has theirown Portfolio and and their own
requirements.
So trying to line upeverybody's specific ITV
requirement Carrier A could have125, carrier B could have 135,
145 and when you're layering adeal that doesn't work, you need
(05:40):
to have all the carriers agreeto a specific valuation and,
honestly, you end up going withthe carrier who requires the
highest ITV if their pricingmakes the most sense and
everyone follows that.
Just adding to the cost.
David Pagoumian (05:53):
So we've been advising our retail partners on
anything habitational get it inearly, because there needs to be
data scrubbing something.
Our organization is, in myopinion, at the frontier of
using data as a wholesaler.
This is sort of a newfoundconcept and not newfound, but
(06:14):
it's still new.
We're still in our infancies ofwhat I know our organization is
aiming to do, and so havingthat vision of where we're going
with data gives our teams theability to be able to advise our
clients about this and helpthem take some of the anxiety
out of these placements.
(06:35):
Listen, you have also a class ofbusiness that has always been
very shoppy every year.
A lot of habitational risks.
Listen, they're all good.
I don't want to suggest good,but they're all ones that want
to develop a relationship.
And then there's all this no,we're just going to find the
cheapest quote.
Those we're going to find thecheapest quote, those are the
(06:56):
ones that are definitely gettingan education and I think
they're turning into those.
Hey, maybe we should startbuilding more relationships with
the insurance industry on atroubled class of business.
Amanda Knight (07:07):
Are you seeing anything else that's sort of
catching some attention as faras deductibles or types of
construction that carriers aretrying to avoid, anything that
we want to kind of put an alertout there about?
Daniel Ball (07:24):
Yes to all those.
I mean we could talk at lengthand I feel like we do talk at
length with our retailers.
But to David's point, the keyis getting it to us early so
that we can start developing aplan and start speaking to these
carriers, getting the ITVscorrect, getting a renewal plan
in place as early as possible sothat when we're delivering bad
news, or at least delivering badnews early so that people are
(07:45):
prepared and no one feels thisis coming out of nowhere.
But to Amanda, to your question, yes, we're seeing deductible
increases, we're seeing linesizes being cut drastically and
the biggest pain point that Ihave faced being down here in
South Florida and seeing a lotof frame and jam, and
specifically older frame and jam, is just the lack of carrier
(08:07):
participation on that class ofbusiness.
I think I had mentioned it inthe article where I once, when I
first started 10 years ago, weused to have 15, 20 carriers
quoting these deals five, 10million limit at a time, and it
was a lot easier to layer.
If you were even layering, itwas a lot easier to place these
deals.
(08:27):
Now I'm stuck with a handful ofcarriers, all of which have
strict restrictions on how muchlimit that they can deploy and
we're seeing deductibles vastlychange from what was once the
norm, right.
So a big thing that peopleoverlook is the change from a
per building to a per locationdeductible.
(08:49):
I mean, we do a lot of gardenstyle apartments down here in
Florida.
That is a huge change in yourexposure you are looking at
let's just use an example ofround numbers $10 million
apartment location where youhave $10 million building.
That 5% deductible, which wasper building, was $50,000.
(09:11):
Now that 5% deductible on a perlocation is half a million
dollars.
So you're, as an insured,taking a lot more risk and I
don't know that that'snecessarily sinking in with the
insureds and not that there'sreally another option.
Right, there's not reallysomeone else out there trying to
go back to the per buildings,so they're kind of stuck.
(09:34):
They're kind of stuck with that.
But that's the biggest painpoint I feel that we have is
just the lack of capacity oncertain classes of business.
David Pagoumian (09:43):
Yeah, I mean, look older construction you're
having a challenge with.
We're getting a lot of insuredsthrough our retailers.
Hey, we're getting ready to buythis portfolio.
Can you give us a range on thepremiums?
Right, and you're seeing some60s with not much update.
You know these are goingpotential aluminum wiring
exposure.
These are going well into youknow.
(10:05):
I mean some of the mostaggressive.
You know maybe 70 cents, butthey're going above a dollar
rate and now it becomes, youknow, how much limit are we
looking to buy?
You know a lot of companies aremaking sacrifices on limits, you
know, and they're working withtheir lending institutions.
Their lending institutions arebeing educated on what's going
on in the market.
But I know that you know ourcollective teams does a great
(10:29):
job doing due diligence and soyou really have the thing that's
changed.
Is you really?
You know, and this is where itfalls on our shoulders you got
to go everywhere becauseeveryone is changing their
appetite on on hab daily.
You know there was a few thatyou know weren't willing to
entertain aluminum a couple ofmonths ago.
Now they're willing toentertain.
(10:49):
You know this would be with theremediation in place and the
proper endorsements.
If you don't have it.
You don't have coverage.
You know establishing for ourside of the street it's
establishing a lead market.
There are still accounts whereyou know you're getting some of
these strong MGA's that we knowthat can still do 100% of the
primary limit, and then you knowthat makes it a lot more easier
(11:13):
, that's more efficient.
But most of the stuff is startsout with a lead player and then
you know, you know you're notgetting anywhere unless you
share that lead quote with thepanel and then you start to see
the program reveal itself.
It's getting somewhat morestabilized.
To say it differently, you know, I think that you know we're,
(11:35):
like you know, in my opinion, afive year hard market.
It's not a hard market, no more, it's just the market.
Right, this is the market we'rein and if you want to play in
it, you know there's this newcadence that you really have to
embrace and you knowHabitational is just one of
those sectors that is feelingthe pain.
There's many others as well.
Daniel Ball (11:55):
I think 2023 was a good, you know year where you
just cross your fingers and hopeyou got a renewal quote from
your incumbent carrier right, ifyou can get your renewal terms.
And you know it was a 35%increase in rate, but they still
gave you the same amount ofcapacity.
That was a huge win.
You know, even if they cut backfrom a 50 million primary down
(12:17):
to a 10 million primary, I meanthat was still a big win,
because the amount of carriersout there offering more than a
two and a half or a five milliondollar line is very minimal.
I think there's maybe two orthree.
So you were just really hopingyou got your renewal quote.
But what we were obviouslyseeing to kind of put the two
together, the ITV and therenewal terms was compounding.
(12:39):
Right, you saw a 45, 50%increase in ITV and then, off of
that ITV, you saw a 45, 50%increase in rate.
And the insurers are looking atone number, they're looking at
the premium and they're seeinghow that compares to what they
were paying last year.
And in most cases, in somecases, you were seeing Triple
digit increases, especially inhave and especially in South
(13:01):
Florida when it was, when it waslesser construction, you know
jam or frame.
David Pagoumian (13:06):
South Florida is its own market with have
because of the cat.
Yeah you know that that's itsown beast, not non cat have.
Yeah, you know is is a littledifferent, little different
genre.
Again, you have to really grindthe way on each of these deals
to demonstrate due diligence,because the pricing that you are
Going to give the client or thepricing that the market is
(13:28):
going to give you know a lot ofthis stuff.
It makes our job verychallenging because you know
we're powerless and that's toughfor us as brokers because we
want to please our insurers orretail brokers.
And you know, and it, you knowit, you know it is what it is,
it's not gonna fly.
You know you have todemonstrate that.
(13:50):
You rolled up your sleeves andthere's no hope here.
You got it.
We got to get the deal right.
We got to get the quote.
Mm-hmm.
I Think we need to write apiece on the anxiety of placing
to have a program.
Scott Gordon (14:05):
Yeah Right, it's its own thing, yeah.
Well and and okay, david, youmentioned South Florida is its
own world.
And, daniel, you're you're downin South Florida.
Yeah, david, you're up, you'reup there, yeah you're up there.
So let's talk about and we knowyou guys handle stuff from all
across the country, but in termsof your own particular
(14:26):
geographic locations, have youguys noticed any unique issues
cropping up in the hab propertymarket that we needed to talk
about?
David Pagoumian (14:33):
Yeah, I mean, you got wildfire, convective
storm, you've got cat wind,whether it's from Virginia all
the way up and around to Texas,and you know, and then you have
fire.
It's so, it's shaken andstirred in every peril, mm-hmm,
and, and that you know.
Add to it the proper ITVs forproper modeling, and then from
(14:54):
that are capacity providers thatwant to play, you know, and so
each of those is different.
You know, there's some marketsthat will write the wildfire,
some markets that won't, and soif you have a program that's got
some wildfire in it, youbifurcated, you separate it, you
place it separately, you treatthat cancer differently.
Daniel Ball (15:14):
Yeah, you know, down here, down here in South
Florida, I know I know it was afew years ago, but I mean surf
side is still fresh on on someof these carriers minds.
And for those who don't know,surf side was the Condominium
that collapsed down in MiamiBeach.
I mean, obviously, florida,being in South Florida, everyone
thinks of the wind and that'swhat's been that the hard right
for For a lot of years and stillis.
(15:34):
But that aop, the X windportion of these deals used to
be nothing, used to be five, tencents ground up.
Get as much limit as you want.
If it's a fire-resistant, Idon't care how old it is, well,
we'll do the whole thing for tencents, five cent.
And now that that has changed,that is drastically changed.
So you're, the wind is achallenge that I want to, you
(15:55):
know, emphasize that, that itremains to be a challenge.
But the X wind is no walk inthe park either, especially when
you have a lot of these olderhigh rises, right, I mean, you
saw what happened, that thatcollapses and it these carriers
don't forget about that.
So that that's definitelychanged, at least the X wind
side of it.
And and the wind still remainschallenging.
So you compile the two togetherand it's become, you know, a
(16:18):
perfect storm.
No pun intended, but you knowone thing CRC has has really
helped and David kind of touchedon it first earlier was Was
getting lenders to kind ofapprove loss limits, because
eventually you run out ofcapacity or capacity becomes too
expensive that it's notaffordable for these insured.
So CRC has done a very good jobwith the modeling team in
(16:40):
modeling air and RMS in order tojustify what limit an insured
should buy and that's not, youknow, a guarantee of if a storm
hits this, this is what it'sgonna cause.
But it's a really good toolthat we're able to use and share
to our clients, the retailersand them to share to the lenders
and the Insured to get some ofthese loss limits approved.
(17:01):
We're not we're not pickingthese limits out of thin air.
We're using data, we're runningmodels and we're using what the
underwriters use to price out adeal to also advise on what
limit makes sense for anindividual insured.
Amanda Knight (17:16):
You know, knowing that the market can be really
daunting right now, ortumultuous, or stressful, or
challenging whatever word wewant to we want to use how does
working with the right wholesalebroker, preferably team CRC,
make a difference?
We talked a little bit earlier,you know, about the data and
analytics we have through ourready platform, but we're also
(17:37):
more than than our platform.
We love it.
It's growing, it's expandingand becoming something that we
really hang our hat on.
But are there any otherdifferences that team CRC makes
for our retail agents and theirclients?
David Pagoumian (17:53):
I really do think.
You know I'm a big believer inexecuting the basics.
Well, you know, for me to havea platform where I could take a
spreadsheet, throw it throughand it calculates a lot of risk
calculation that I could sharequickly to make quick decisions
with clients and underwritersand colleagues on what their
thoughts are on the markets, andthen to also ask the machine
(18:15):
hey, which markets do you likefor this class of business?
You know I'm already at the 50yard line, right, and it's we
still got.
You know a whole much you know.
So it takes us very quickly toareas of qualifying, of getting
ready for pre renewal meetings,of being able to have really
deep, meaningful dialogue on ondata and what it means to that
(18:38):
specific risk.
And I think when you holdsomebody's hand that way, you're
showing them something thatthat truly or I don't want to
say you know it's rare, it'srare rur in the wholesale space,
right, we're almost meeting ourretail partners very closely to
where they operate and thenhanding off the ball at a very
(19:01):
close distance for them to speakwith their.
So we're taking a lot of thatfriction away that happens in a
trade with, with a lot of thesetools, right and so that's just
good basic blocking and tacklingwhich champions are made from
right.
So you know.
So, from that perspective, youknow, I've been living and
(19:23):
breathing that for a long time,so for me that's very meaningful
.
And, you know, if you'resomeone that's with our
organization, you have access tothose tools.
You know the world is youroyster, right.
I mean, you know you're, you're, you're your own entrepreneur.
You're, you're, you're the CEOof your team, of your space.
Daniel Ball (19:41):
Yeah, I think access is has been just a big,
you know access to product,access to tools like the
modeling I touched on earlier,access to carriers, right.
So, you know, I know a lot ofsmaller wholesalers or other
shops might not have access toevery market and I'm not saying
we have access to every marketavailable in in the country but
we have the big ones and we havethe main players in our Hab
(20:04):
space, right, the Hab space thatwe're on a podcast talking
about.
So we we are lucky to have, youknow, a leadership team that
that makes sure we have thecorrect appointments that allow
us to do our job.
We're using the data that wehave to try to create, you know,
new products, create capproducts, great needs, fill
(20:25):
needs in the marketplace,because there's there's just a
need for capacity right now.
And if we can somehow createcapacity, if we can take our
data and go to a insurancecompany and say this is what we
want to write, we want to writethis is, this is what we have,
this is the lost history.
You know that we've accumulatedover the years and help us do
the, help us create a program.
(20:46):
That's really big right now andthat's a really good talking
point to make to our retailersin a really competitive
marketplace to be able to tellthem that we have access to all
these products, and not only allthose products, but exclusive
products that we can use to helpsave your insurance money.
And that's how they win dealsand, you know, form build
(21:07):
relationships.
So it's a big, it's a big toolto have access, or it's a big,
you know, luxury to have accessto all the markets that we do.
Scott Gordon (21:15):
Well, david and Daniel, thank you so much.
This has been great.
You can get up out of yourchairs and wait.
No, there's something else wedo at the end of the podcast.
Sorry, you can't leave yet I'vebeen standing.
This is something we like tocall rapid fire.
Amanda Knight (21:32):
All right, let's go.
Scott Gordon (21:33):
If you could have an unlimited supply, an
unlimited supply of one thing,what would it be?
Daniel Ball (21:38):
Talent capacity for a frame and jam construction.
Amanda Knight (21:42):
Oh man, I think that's a pipe dream.
Ok, and one more what?
Scott Gordon (21:46):
what item is worth spending more money on?
Don't go cheap.
Amanda Knight (21:53):
You don't buy generic something you splurge on
.
Sushi.
Oh yeah, I could see cheapsushi could be a bad idea.
David Pagoumian (22:00):
I want cheap sushi.
Well, you can eat sushi.
Daniel Ball (22:04):
No golf courses.
I can't stand a really poorgolf course.
You don't want to hit a cow,right?
Yeah, you want nice greens, youdon't agree?
Amanda Knight (22:13):
Well, Dave and Daniel, thank you so much for
taking time out of your day tojoin us.
If you're a listener, thank youfor joining us as well.
Providing current insights intothe marketplace is just one
more way CRC Group is placingyou first.
We'll see you next time.
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