Liability Insurance Contributing Columnist


The Problem with Property

Jen Pino-Gallagher
Director of Food & Agribusiness Practice
M3 Insurance

April 12, 2024


The official definition of the word trend is “a general direction in which something is developing or changing”. The “general direction” of property insurance premiums are easy to see — the trend is going up and has been for several years.

This trend in increased property premiums is clear. What may be a bit less obvious are the dynamics leading to this upward trend and the actions a dairy processor can take to mitigate the rising costs.

What’s causing the prolonged increase in property premiums? One cause is a rise in claims due to extreme climate and weather events.

The National Oceanic and Atmospheric Administration points to 2023 as being a record year for “high frequency, high cost, and large diversity of extreme events” leading to a total of $92.9 billion in damages from climate and weather-related events.

And, these weather events are not limited to hurricanes on the coasts or wildfires out West. According to the January 2024 report, “the costliest 2023 events were the Southern / Midwestern Drought and Heat Wave ($14.5 billion) and the Southern and Eastern Severe Weather in early March ($6.0 billion)”

Dairy processors work hard to control variables within their business – but many ask what can be done about property insurance prices in a world where extreme weather and underwriting losses are becoming the norm.

According to Jim Brunker, Senior Client Executive at M3 Insurance and former president of the Dairyland Chapter of the CPCU society, several levers exist that a dairy processor can pull to help mitigate property premium increases, as well help reduce potential surprises during the property renewal.

•Complete any outstanding loss control recommendations prior to renewal, especially any critical recommendations that will affect your renewal. Examples could range from hissing boilers to basic housekeeping. And, work with your broker to ensure that once these tasks are completed, this has been communicated back to the underwriter.
•Include any critical engineering recommendations in your capital expenditure budget annually. Often, insurers prefer you invest in risk reduction measures for your production facilities to improve your insurability. Examples include adding sprinklers, fire walls, smoke alarms, and annual infrared surveys of all electrical systems to reduce the severity of a potential loss.
•Communicate your sustainability investments, as those efforts will not only help show that your organization is best-of-class among your peers, but these investments also often reduce the risk of loss. For example, green buildings often have roofs designed with enhanced materials to withstand greater weight. This helps to combat insurance losses from extreme weather events. Some property insurers have even begun to offer sustainability premium credits.
•Consider taking high property insurance deductibles to reduce premium cost, coupled with deductible buy back insurance.
•Consider negotiating a flat fee with your insurance broker, rather than a commission-based approach.

Shared and Layered Programs
One approach the broker may suggest if property insurance options are limited due to past claims or insurability issues, is what is known as a “shared and layered” property insurance program.

This is a program where multiple insurance carriers share in the overall property risk and each assumes a percentage of the overall limits.

A shared and layered program is much more complex than a program involving only one insurance carrier and results in a patchwork quilt of multiple carriers.

When considering this approach, it’s critical to ask your broker for details about each carrier’s financial strength.

Other questions to ask include:
•Do you exercise the same due diligence when selecting carriers to participate in the shared and layered program as with a standard program?
•What experience do you have in structuring a shared and layered program?
•What steps do you take to ensure all layers are structured correctly so as to prevent one insurer overcharging for the same loss percentage in the same layer?
•Are there advantages to meeting, either in-person or virtually, with the carriers involved in the shared and layered program?

While there is no perfect solution to the ongoing property insurance challenge, there are proactive levers that dairy processors can pull to soften the blow and hopefully get the property premium trend going in the right direction.

Jen Pino-Gallagher is director of the food and agribusiness practice at M3 Insurance. M3 Insurance offers insight, advice and strategies to help clients manage risk, purchase insurance and provide employee benefits. The views expressed above do not necessarily reflect those of Cheese Reporter. You can contact the columnist by calling (800) 272-2443, or by visiting


Jen Pino-Gallagher

Jen Pino-Gallagher is a Director of Food & Agribusiness Practice at M3 Insurance. M3 Insurance offers insight, advice and strategies to help clients manage risk, purchase insurance and provide employee benefits.
For more information, call (800) 272-2443 , visit

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