Wednesday, August 28, 2013

Commercial Insurance Rates on a Steady Rise

Commercial insurance rates has been on the decline for the past few years. This trend has now reversed and rates have been on the upswing for the last 4 months with June showing a 5% increase. This had to happen sooner or later – what goes down must come up. The current rise has been sparked by the impact of natural disasters, fraud, general issues of theft and changes in regulations.

The biggest increase has been in commercial auto insurance where rates have increased by over 6%. Property, directors and officers, general liability and employment practices liability insurance (EPLI) came next at over 5%.

What Next?

At present the commercial insurance market is relatively stable and the indications are that it will remain this way. There were no surprises or unexpected increases in commercial insurance rates in June and there are no signs of any drastic changes happening soon. Even the effects of Hurricane Sandy seem to have had little impact on commercial insurance. One reason for this could be that the bulk of the damage and losses were caused by flooding which is not something that the American insurance industry is responsible for.

According to insurance market analysts, the way ahead is that of slow and steady rate increases. Some months may show a decline in rates but it would be a mistake to read too much into that as these are going to be only small bumps in a regular upward movement. What could affect market dynamics and prove the predictions to be wrong are the recent moves by Berkshire Hathaway to make an entry into the primary casualty and property insurance markets. The company has not yet revealed its plans or the size of its entry vehicle. If the entry is on a large scale then whatever action it takes will have a significant impact on insurance rates.

A steady rise in insurance rates is not good news for businesses. Overheads are already high and any increases will be hard to absorb. But there is no point is a business owner burying his head in the sand. It makes sense to examine the possibilities and options available and plan on ways to minimize the impact without reducing the coverage. In fact this kind of analysis could even reveal where additional coverage is called for – another cost perhaps, but one that is worth incurring.

What Is Your Insurance Costing You?

The rising commercial insurance rates will, in all probability, continue to move upwards in the foreseeable future. Now is a good time to review your commercial insurance policies to see if your coverage is adequate and if there are ways in which you can cut your insurance costs without compromising on the coverage you have. Even if you have been insured for a long time with no problems, revisiting your policies to see if they reflect the changes in your business is a good idea. Contacting your broker to provide you with a professional analysis of the coverage you have vis-à-vis your present insurance needs will help you to make the changes required, if any. And a broker’s expert knowledge of insurance will help you to find the most cost effective solutions.

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