Management Matters Now and Always; The Hard Market Always Around the Corner

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Business owners have largely benefited from the effects of the insurance market conditions since 2005. Price decreases year over year from 2005-2012 were realized in premium dollars and pure rate. In a lot of cases, the rate decreases were not deserved. Eventually this would catch up to the insurance companies, or that’s what experts keep saying.

As the rates continued to decline so did the economy. Fast forward to 2008 and the great recession; industry experts globally, were predicting that the soft insurance market would soon be turning due toeconomic factors plaguing the insurance industry. Plain and simple insurance rates for the same risk a year ago would be rising and how fast no one knew.  While the anticipation of rising rates was thought to be around the corner, so was a dwindling economy. For businesses this meant lower payrolls, lower sales/revenues, less employees etc. For insurance companies this meant lower premiums yet again.  Another year of renewals came and rates yet again were slightly lower. Another year and rates held firm.

Well now its 2012 and Industry Experts say the hard market or at least a hardening market has just about arrived. For a business owner this means you can expect some sort of premium increase given your exposures have stayed the same.  For that same business that has not been proactive aboutmanaging their risk or one with bad losses…expect a larger premium increase or a hard time finding aninsurance company to insure you.

On average we have seen and heard of 4-6% increases in the first quarter for a business with no claims or underwriting issues. Some businesses are seeing 8% or more. Property seems to be seeing more of an increase due to the natural disasters and other issues we have seen across the U.S. Experts think that the average renewal will see close to 10% increase in insurance costs by the end of 2012.

Hopefully your business has the right insurance broker who has already implemented a plan to manage and reduce your risk.  With a proactive risk management plan, a business can be presented to theinsurance industry in a way that shows you don’t deserve an increase. If an increase is inevitable, having a plan in place to manage all areas of risk within your business can ensure your insurance premiumsare at the lowest band of pricing available in the market place.

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