Combating Unprecedented Insurance Rate Increases

It’s no secret that inflation is the cause for many goods and service suffering from unprecedented price increases. Insurance companies and carriers are no exception, with rate increases from 30% all the way to 100% rate hikes. While many business owners and executives are frantically trying to cope with the rate increases, believe it or not, there are a few things that insureds can do to help offset some of the increased pricing.?

But first, let’s take a look at some factors that are driving these rate increases. Along with overall inflation, labor shortages, supply chain and logistic delays, and catastrophic weather events, there isn’t just one culprit attributing to insurance ratehikes.

In 2022 alone, Travelers Insurance saw 15 named events that resulted in $1 billion dollars in losses, each. With $15 billion in losses, from 15 events, not including other claims, it is easy to see why rates, especially property insurance is falling victim to these unprecedented rate increases.

However, catastrophic claims are just a small piece of the pie when equating for carrier rate increases. Ever since the COVID-19 pandemic, business owners across America have been left dealing with labor shortages in addition to drastic supply chain issues. Naturally, when auto repair shops and contractors are facing these issues, repair or replacement of the damaged property takes longer to complete ultimately resulting in more claims dollars being paid out from the insurance carrier to the insured.

Now that we have a broad understanding of why rates are increasing, let’s talk about a few ways to offset some of the costs when reviewing your insurance renewals. ?

Step 1- Review coverage with your insurance agent to ensure your business is properly and accurately insured on an annual basis. Believe it or not, many business owners are unaware of their coverage and policy limits. Working with your agent to review coverage and limits on an itemized basis will eliminate being over-insured, and more importantly, underinsured.

??????????????Being over-insured is just a flat-out waste of money to the business. Why pay for insurance you do not need? On the flip side, being underinsured gravely puts the business in danger of having potential claims being denied resulting in a huge financial burden on the company. Reviewing your policy annually with your agent is a sure-fire way to make sure you have a comprehensive understanding of your current business insurance.

Step 2- Explore increased deductible options. Choosing the proper deductible for your insurance coverage can often be a tough decision for business owners as it is the age-old question, do I pay to have a lower deductible or take a reduction in premium to have a higher deductible?

While having a lower deductible does provide more opportunity for eligible claims to be covered by the insurance carrier, it doesn’t come without its downfalls.

In the opinion of many insurance professionals such as myself, business insurance shouldn’t be purchased to cover everyday claims such as broken windows, and minor dents and dings. While the insurance carriers may still cover these minor claims, it takes an overall negative impact when it comes to the insured’s loss ratio. Filing too many small claims will result in higher premiums on top of the current rate hikes.

??????????????Adding a higher deductible to your insurance policy will not only result in immediate premium reductions, but it will also eliminate small routine claims, in turn, keeping your claims history for the business clean.

Step 3- Implement best practices for your company.

??????????????While insurance claims are ultimately unavoidable as accidents do happen (Afterall, isn’t that the whole point on insurance?), taking a proactive approach to reduce avoidable claims is the smartest approach to keeping your insurance claims under control.

??????????????Introducing practices such as monitoring driving, employee drug testing, and safety meetings are all a low-cost approach for employers to implement and help mitigate the possibility of claims from occurring. Having your business viewed as best of class by an insurance carrier will almost certainly help secure the best rates available.

In conclusion, no one likes paying more for anything, especially insurance. While insurance carriers are facing upwards of 30% rate increases, taking proactive measures to help reduce claims is the easiest and quickest way to help keep your insurance premiums as low as possible.

Don’t know where to begin? Reach out to myself at Integrated Insurance Solutions to review your current insurance coverage and receive a no obligation coverage analysis as well as market comparisons.

Kevin Bromley ??

Business Development Manager & Commercial Lines Producer

Integrated Insurance Solutions, Charlotte, NC branch

585-406-7404

[email protected]