The General Liability market for snow plowers—especially in the Northeast—continues to be very difficult, especially for distressed accounts with loss severity & frequency. For the 2021-2022 season we expect more of the same as last season: increased pricing & lack of adequate capacity.
How Did We Get Here?
I'm often asked why snow plowing premiums are so high, even for small snow removal contractors.
The short answer is that awards on the claims—mostly slip and fall—have been steadily on the rise. In part, this trend derives directly from the medical expenses that can accumulate after an injury. With healthcare expenses having increased significantly over the past decade, injury-related claims have skyrocketed and premiums have followed suit.
Another contributing factor is how these losses are being handled. The insurers are rarely taking these claims to court because the costs involved can be staggering compared to the actual indemnity of the claim. In the Northeast, for the most part, carriers have not found juries to be sympathetic toward insurance companies. As a result, claim settlements have become the norm.
Finally, for years this class of business had been severely underpriced. Snow removal losses (like many 3rd-party claims) can take years before they're even reported, which delays the loss from hitting the insurer's books. Then the adjustment of these losses often takes quite a while—sometimes years—with reserves increasing as the claim progresses. Before the carrier knows it, their book of business that was once running very well for a few years can suddenly spike to a well-over 100% loss ratio. They react by taking drastic action—typically significantly increasing rates or discontinuing writing the class altogether.
Which Snow Plowing Exposures Are Hardest to Place?
Typically, the most difficult are high-volume retail and transit hub exposures, which see the highest loss frequency; and nursing homes, assisted living facilities and hospitals, which can see the highest severity. For obvious reasons, plowing of airport runways are very difficult to cover as well. There are markets that will write all of these exposures, but you can expect to see minimum premiums starting at $25,000 and easily climbing in excess of $100,000 for the toughest risks.
In general, snow removal at the following are more difficult to place:
- Convenience Stores and Gas Stations with Convenience Stores, especially 24-hour locations
- Pharmacies, Hardware Stores, Big Box Stores, Large Grocery Stores
- Banks with Walkup ATMs
- Hospitals, Nursing Homes/Assisted Living Facilities, Surgical Centers
- Stadiums, Airports
- Public Roads, Railroads, Subway Locations
By location, snow and/or ice removal operations in Philadelphia and the five boroughs of New York (Manhattan, Brooklyn, Queens, The Bronx and Staten Island) are difficult to cover.
Contractors who remove snow and ice from roofs, or who are involved in avalanche-control operations are also hard to place.
How to Get Your Client the Best Deal
For one, start the submission/quoting process early. Though we're in fall now, keep in mind for the future that the best time to begin looking for coverage for a snow plower is late summer. Most markets have trouble handling the volume of submissions they receive on this class in the fall and early winter, and quote times can sometimes increase dramatically once the weather gets colder and the submission flow picks up. Capacity can also become an issue as winter approaches, because some carriers will stop writing once they hit their magic number in terms of snow plowing premium.
All this in mind, it's not surprising that it's becoming more common to have snow plowing policy terms that begin in August or September. This can be a good tactic for two reasons: it's generally when the traditional landscaper/snow plower has decent cash flow; and it forces the underwriting process to begin (and end) outside of the busy season for snow plowers.
To get your submission to the top of the pile, here are a few items that most underwriters will be looking for:
- A fully completed ACORD application & snow plowing supplement
- 3-5 years of currently valued loss runs (some carriers are even asking for 7 years)
- Detailed information on what, exactly, is being plowed – including addresses
- Copies of the insured's contracts with their customers
Look to the Farmers' Almanac
The 2021-2022 Farmers' Almanac is predicting a near-normal January with a flip-flop forecast in February that will produce a much quieter month in terms of storminess across much of the country. They predict 57% fewer days of measurable precipitation compared to January. They are forecasting a "winter whopper" for parts of the Northeast and Ohio Valley toward the end of February. Another "atmospheric hemorrhage" from the Pacific could lash most of the far west with everything from strong winds to heavy rains and snow.