Surf, Sun and Snow Plow Renewals

Keeping the roads clear of snow is an essential job that snow removal contractors perform for their communities each winter. But right now, with summer heat still upon us, snow plow operators — many of whom often work as landscapers in the off-season — are more likely thinking about suntans than snowdrifts.

To best position these clients for what lies ahead in terms of their General Liability (GL) coverage, it's crucial to make them aware that "winter is coming" — code for the news that troubled times are in store due to various factors in the insurance market, the legal climate and, well, the actual climate.

Barriers Higher Than Snowbanks

An agent's job to find a policy for snow plow removal clients is more difficult when the clients service locations that historically have posted the biggest loss frequency (high-volume retail and transit hub exposures) or severity (nursing homes, assisted living facilities and hospitals).

Increased risks such as property size, amount of foot traffic, nature of business, etc., reduce the number of insurers willing to write coverage. Premiums increase accordingly, from a minimum of $25,000 to $100,000 or more for the most difficult exposures. Snow plow operators will have the most difficulty obtaining coverage if they service the following:

• Big-box stores
• Convenience stores
• Gas stations with convenience stores (especially those open on a 24-hour basis)
• Pharmacies, hardware stores, large grocery stores
• Banks with walk-up ATMs
• Hospitals and surgical centers
• Nursing homes/assisted living facilities
• Stadiums
• Airport grounds and runways
• Public roads, railroads, and subway locations
• Rooftops (providing snow and ice removal)
• Avalanche-control operations
• The city of Philadelphia and the five New York boroughs — Manhattan, Brooklyn, Queens, The Bronx, and Staten Island) — providing snow and ice removal

5 Reasons Prices Are Increasing

Regardless of the relative size of their operation, snow plow operators have seen premiums increase steadily over the last several years, with little relief in sight for 2023 due to several contributing factors, including these five:

1. Mother Nature

The freeze-and-refreeze phenomenon presents a major challenge for snow plow operators who service big-box stores — huge retail spaces surrounded by oceans of parking lots. Snow slowly melts overnight only to refreeze the next day, creating slippery spots in the parking lot that the snow plow operator must find and cover with salt to add traction. The situation is rife with potential for slip-and-fall incidents.

2. Spiraling claims, fraud and medical costs

Mostly categorized as slip-and-fall incidents, claims have skyrocketed over the past 10 years, both in frequency and amount. Claims that years ago were often settled for $10,000 to $15,000 today net settlements of $50,000 to $75,000. The growing number of fraudulent claims also drives up costs significantly, as does the substantial increase in medical expenses that often pile up post-injury.

3. Contractual obligations

Snow plow operators work under contracts that hold the owner harmless. This leaves the operators responsible if a slip and fall occurs in a parking lot, road, etc., they service.

4. Regional severity, legal differences

The legal climate in certain East Coast states — New Jersey, New York, Pennsylvania and Connecticut — characterized by sympathetic juries awarding windfall settlements has become normalized. Jurors' anti-insurer sentiment means insurance companies rarely choose to incur the considerable expense of taking claims to court, opting for less-expensive, out-of-court settlements. States like Colorado and a few others, on the other hand, have implemented legislation that essentially voids contractual language that obligates the snow removal contractor to indemnify the service receiver (the property owner, generally).

5. Tough insurance market

This class of business has been further burdened by years of severe underpricing; losses that went unreported for years before hitting an insurers' books; and resulting loss adjustments that made loss ratios suddenly spike to well over 100% in what had been considered a well-run book of business. Carriers responded by either substantially increasing rates or exiting the GL market for snow plow operators altogether, leaving fewer markets to handle the risk and further driving up premiums — an uptick of 200% or more in some cases in the past five years alone.

Here's the Optimum Time for Coverage Shopping

The best way to secure the ideal carriers, pricing and terms for your snow plow removal clients is to rethink the timing for the entire process.

Late summer is actually the optimum time to start evaluating prospective GL carriers. Insurers will be more receptive to receiving submission packages that contain all the information their underwriters need to analyze the risk:

• An ACORD application, completed in full
• A snow plowing supplement
• Currently valued loss runs (typically three to five years' worth, although some carriers require a seven-year accounting)
• Copies of the insureds' contracts with customers
• Precise details (including addresses) about the property or location to be plowed

By recalibrating snow plow policy terms to begin (and renew) in August or September — which some carriers may be agreeable to — you avoid the year-end stampede for coverage and the slower response times to get quotes.

You're also less likely to encounter carriers that have stopped taking new submissions because they've reached maximum capacity, which increases the breadth of carrier prospects. Keep in mind that while standard markets will insure the landscaping portion of your clients' business, the excess and surplus (E&S) market will likely need to step in to provide the GL for the snow removal operations.

Not only will carriers be more receptive, but clients will have more time and energy to better prepare for the underwriting process since their busy snowplowing season hasn't started yet. And because these clients typically have more in their coffers earlier in the year, premium payments are less likely to slow cash flow.

The Farmer's Almanac Says...

The Farmer's Almanac* predicts the United States is heading toward a 2022-2023 winter season that will arrive earlier than it did last year and will provide plenty of heavy rain and snow, at times resulting in record-breaking temperature extremes as low as 40 degrees below zero in the eastern two-thirds of the nation.

While teeth-chattering temperatures are expected to blow into many areas, especially in the North Central region of the country, the Almanac forecasts an active storm pattern will be present for the bulk of the season, lingering over the eastern half of the United States. Milder, near-normal winter temperatures will be limited to the Southwest.

These predictions appear to illustrate the increased risks that snow plow operators — particularly those based in the Northeast — often face, leading to yet another year of challenges in the GL market.

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