The Expanding Risk Pool of Global Commercial P&C Insurance

The Expanding Risk Pool of Global Commercial P&C Insurance


Risk to business property and workforce is not a newfound threat for any industry. The pressures always abound, depending on the location of the property, vacancy rates, and economic stability or lack thereof. However, the current scenario is peculiar because businesses (especially small and mid-sized ones) may be hard-pressed from all sides.

On one end of the spectrum, the commercial property and casualty insurance market is currently at an “inflexion point,” as revealed by McKinsey’s 2023 report. Carriers are facing the risk of losing relevance (which may lead to a rise in insurance rates) owing to factors like inflation, geopolitical disturbances, and capital constraints.

On the other end, the present banking turmoil may place greater regulatory scrutiny on smaller banks, thereby tightening lending standards (CNN reported). Not much can be said about commercial real estate prices (estimated to be high) as credit becomes scarcer. Business owners will be compressed if they do not secure their properties and workers with reliable commercial P&C insurance.

In this article, we will discuss the types of threats looming over business properties which reiterate the importance of being insured.

1.     Theft and Burglary

An alarming phenomenon called “organized shoplifting” is on the rise. CNN recently reported that small and large retail outlets across the US are seeing a surge in thefts. While some cases are petty and minor, others involve well-planned sprees where entire shelves are being ransacked.

Big outlets like Target are also reeling under this problem, where the company disclosed that it may have to face a loss of at least half a billion dollars this year. Other companies like Whole Foods and Nordstrom have decided to shut down San Francisco outlets due to economic tensions.

In 2022, news circulated on how burglars plundered an Apple store in California, precisely a total loot of $35,000 worth of phones. Such crimes are committed by people struggling to feed their families as well as teens grappling to get by.

Yes, inflation and economic downturn are to blame, but knowing the answer does not automatically solve the problem. Businesses (especially blooming retail outlets) must learn more about the different types of property and casualty insurance options to stay safe. After all, retail theft is emerging as a “worsening trend,” as described by Target’s CEO, Brian Cornell.

2.     Workplace Injuries

Every worker wishes to know that they’re laboring hard in a safe environment. Unfortunately, the numbers tell a different story.

According to the Bureau of Labor Statistics, a total of 2.6 million workplace injuries took place in 2021. Out of these, 5,190 cases were of fatal injuries, which was an 8.9% increase from the previous year. The two industries recording the most cases included construction and logistics.

Businesses need to tighten safety measures so that no employee’s well-being is at risk. Those handling dangerous equipment must receive proper training, and the equipment must be routinely checked for maintenance and repairs.

Other ways to prevent accident occurrences include –

  • Creating a wellness and safety plan that clearly outlines management’s expectations
  • Conducting thorough pre-employment examinations for demanding job roles
  • Holding regular training sessions on advanced equipment and possible health hazards
  • Early identification of safety concerns
  • Providing top-quality safety gear
  • Abiding by regulations governing the industry. For instance – commercial truck drivers and employers must strictly adhere to the Federal Motor Carrier Safety Administration’s rules for work hours, vehicle maintenance, cargo loading and unloading, alcohol consumption, etc.
  • Addressing staffing issues

Despite all kinds of precautions, accidents may still happen (because of circumstances beyond anyone’s control), and businesses must stay prepared through workers’ compensation insurance programs.

According to Porter & Curtis, opting for a consultative approach will ensure a custom solution best suited for unique business needs. In most cases, these programs will cover damages associated with lost wages, medical expenses, etc.

3.     Natural Calamities

Natural disasters, such as floods, earthquakes, storms, etc., uproot residential and commercial properties. As of 2023, the real threat is from climate change – Rostin Behnam, a financial regulator, went as far as to say that climate change may hit the financial market more severely than the 2008 recession.

In the past few years, incidences of natural calamities are only rising. It’s difficult to forget Northern California’s 2017 wildfires that left thousands of businesses (primarily wineries) in rubble. Then, the recent torrential rainfall and subsequent flooding in Japan compelled businesses to shut down factories (as many were likely to be flooded).

Moreover, the southeast region of Turkey was hit by an earthquake so massive in scale that nearly 500,000 homes were in shambles, 110 workers in textile production houses died, and it is expected that the country suffered a loss of $84 billion. When nature deals with an iron rod, the only way out is to minimize damage.

Businesses must secure their assets with proper insurance coverage. The coverage is usually provided for the building and its contents like precious metals, carpets, furniture, air-conditioners, etc.

What the Future Holds

Shannon Varney, one of the chief reporters for McKinsey, notes that the current commercial P&C insurance market is turbulent as risks (and threats to commercial property) are getting severe. Customers need innovative solutions that can match their needs.

For instance – the World Meteorological Organization revealed that global temperatures will reach new world records in the upcoming five years. This is an indirect assurance that the next few years will be marked by more cyclones, ice storms, floods, and other calamities that threaten business security.

Furthermore, a NABE survey found that inflation rates are also expected to stay above the Fed’s 2% target till the fourth quarter of 2024. With such risks looming on the horizon, businesses cannot afford to stay uncovered. If anything, they must start looking for custom solutions that help them stay afloat amid tough times. 

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