In March, insurance exchange MarketScout reports that commercial insurance rates climbed by 3%, outpacing February’s increase of 2%. Commercial Property and Worker’s Compensation rates led the way with increases of 4%. The results continue to show a slow and steady path toward rate increases in all segments. The combined ratio for 2011 was 107.1, a 4.5% deterioration from the previous year primarily due to catastrophe losses. This means that the carriers are continuing to tap into their reserves to pay current claims, and they must force rates up in order to compensate for it.
To be honest, we have had 9 straight years of decreasing rates in this country, so it was bound start turning the other way. Customers are used to having decreases in annual premiums at renewal, but they need to start getting prepared for some small increases in the next couple of years.
What can you as business owners do about this trend? Here are a few ideas that might still help with your bottom line:
---Don’t give up coverage if premiums go up- that is the natural tendency. However, this doesn’t work in the long run. Think about this- if you take away the insurance on a risk, does the risk change- NO! All that has happened is that you are agreeing to pay the full cost of the risk by not transferring it to the insurance carrier. If a claim happens, you will pay ALL of it!
---Review your current coverage limits with your agent prior to renewal. He (or she) should be doing this anyway, but if they are not, your property values and payroll values may be too high and have just been continued. (If nobody has reviewed your coverage every year with you, call us!).
---If you are having claims problems in a certain area, put an emphasis on why it has happened, and what you can do about it. Many times, claims occur because of a lack of awareness by employees or a lack of attention to details.
---Check you business’ website and see what you are claiming you do that you may not really do. Once again, your agent should be monitoring this as well. Presenting yourself to the insurance marketplace in the best light can help you attract the top insurance carriers, who have the best prices.
We are in a tougher pricing market than we have been in the last 5 years. However, that doesn’t mean that you specifically will have to pay more for your insurance. In a large way, you still have some control over your premiums for your business. Make the most of them!
Bobby Bland PWCA, CIC
Commercial Risk Service
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