Millers Mutual strives to keep our agents and clients updated on our response to rising inflation. Please read the following statement issued by Millers Mutual on October 1, 2022 about the impacts of inflation on our business.
Millers Mutual Customers Will See a 15% Building Valuation Increase on Renewals Effective 12/1/22.
Inflation is creating immense pressure on small commercial and property lines. It is increasing claim costs and exposure-liability trends, while challenging us to maintain adequate pricing. Read more to understand Millers response and find helpful data supporting our decision.
We made the decision to increase building values to 6.5% effective 8/1/22 based upon the available information from building valuation service providers. However, with the elevated levels of inflation continuing, we’ve determined this increase is not sufficient to address the concerns inflation is creating for us as a company and for our insureds as it relates to their levels of coverage on their properties. We must further increase our building values to continue providing an adequate amount of insurance for our customers’ properties.
Effective December 1, 2022, our insureds will see a 15% Exposure Increase (building value) on renewals. We will continue to monitor these inflation drivers and are committed to lowering our building exposure increases once we have achieved acceptable building limits for our insureds and obtained rate adequacy.
The following data points support our decision to increase our building values:
- The Joint Center for Housing Studies of Harvard University reported the value of a landlord’s rental property increased by 16.8% by YE 2021 and hit 20-year high in early 2022, growing 22.5% year-over-year. According to this, the very asset our insureds are trying to protect has increased in value during 2021 alone to support the level of increase we are implementing.
- According to the US Bureau of Labor Statistics, the Multifamily Residential Construction Producer Price Index increased 18.7% by year end of 2021 and saw another 15.7% increase just in the first half of 2022. (That equates to an astonishing 37%+ increase in cost of multifamily construction since 2020, which mirrors our observed increase in loss costs at Millers.) Costs of both materials and labor are driving these increases. Any insured who has recently considered or undergone capital construction projects should be quite familiar with these increased costs of construction.
- The Joint Center for Housing Studies of Harvard University reported the YOY percentage increase in rent was 16.2% in the end of 2021. Insureds who stayed in step with the greater rental market should be able to absorb this increase in limits without seriously eroding their margins in order to continue providing adequate protection of their financial investment.
At Millers, we pride ourselves in understanding the intricacies of multifamily housing and being the carrier of choice for multifamily housing risks in our operating states. We will continue to provide the best possible coverage and services for our customers during these challenging times.
We wrote a helpful article explaining the reasons behind adjusting building values due to inflation, and how it is meant to protect our customers. You can access it here.
Should you have questions or concerns about this notice, please contact Joe Begyn, VP of Underwriting, at firstname.lastname@example.org.