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Commercial Insurance Market Tightens
For the last several years, commercial insurance buyers have experienced relatively low premiums and generous underwriting standards. However, the market has begun to change, and we expect the next couple of years to be characterized by rising rates and tightening underwriting standards. Already we are beginning to see annual increases across the board, and some non-traditional businesses are having trouble getting coverage at all.
There are several reasons for this change. The first is historical: The insurance market always has been very cyclical. When a market gets too soft – with rates and underwriting that are very favorable to buyers – insurers no longer can make a reasonable profit, so they begin to raise rates and stop underwriting more expensive risks. Eventually the market becomes too restrictive, and rates and terms begin to loosen. The current commercial insurance market has been soft for an unusually long period, so a tightening is not unexpected.
There are other factors that are prompting this market change. For example, insurers offset some of their losses by investing the premiums they receive in conservative investments such as real estate and bonds. These kinds of investments have performed very poorly in recent years, leaving insurers with less cushion to pay out losses.
At the same time, many of those losses have been going up. Workers compensation claims are being driven up by rising medical costs and by an increase in claims as a result of the poor economy. Unusually strong storms in the Midwest last year and concerns about an increase in such storms are driving up property claims, and liability claims are being boosted by an overall increase in litigation and damages awarded.
So what can you do if you are a commercial insurance buyer?
First, we at The Bensman Group will work with you to find the right coverage for you at a competitive price. We work with eight carriers, all of which offer extraordinary financial stability, customer service and depth of coverage. We are happy to consider multiple carriers for your business to ensure that you are getting the best possible value.
To help mitigate the effects of any rate increase, you might consider increasing your deductible on property insurance or entertain a medical deductible on workers compensation. And we can talk with you about other changes you might make to improve your insurance program.
We are happy to discuss any of your insurance concerns and to help you find suitable coverage for your business. Please contact us at 847-572-0800 or email@example.com.