February 2025 Volume 7

OPERATIONS & MANAGEMENT

INSURANCE MARKET UPDATES AND PROPERTY STRATEGIES FOR FORGERS By Katie Hensley, AIC

Property Insurance Specifically: Increased Frequency of Catastrophic Events There are several attributing factors impacting the property insur ance market. One of the most substantial factors is the frequency and severity of catastrophic events that have surged, significantly impacting the property insurance market, especially for perceived high hazard classes of business. In 2023 alone, the United States experienced numerous catastrophic property losses, which have strained the reinsurance market and led to increased premiums and reduced coverage availability.

Introduction In the evolving landscape of insurance, especially property insur ance, forgers face unique challenges that necessitate specialized insurance and risk engineering strategies. The following explores the critical aspects of insuring your operations, types of insurance programs to consider, the reinsurance dilemma, and the proac tive steps forgers can take to improve their insurability and secure favorable insurance terms. Market Update And Underwriting Concerns

Not everything is bad news! Let me start by saying not everything regarding insur ance for forging operations is dire. In fact, some of the insurance program rates we are reviewing continue to decline in cost with more favorable terms. Workers’ compensation and cyber insur ance rates continue to decline or remain steady in most jurisdictions. Casualty lines for general liability, commercial auto and umbrella are expe riencing marginal market increases, with commercial auto remaining the most chal lenging. And as many forgers know or have expe rienced, property insurance remains the most challenging line of insurance for foundries. The lack of insurance compa nies interested in the industry remains a genuine issue. Even then, there were posi tive signs for forgers as we saw declines in rates in the fourth-quarter 2024 as rein surers looked for opportunities for growth.

Figure 1: The premium change for commercial property for Q1 2013 through Q2 2024 is shown. (Artwork courtesy of CIAB)

Figure 2: The 1980-2024 United States billion-dollar disaster year-to-date event count (unadjusted) is shown. (Artwork courtesy of NOAA – National Oceanic Atmospheric Administration)

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