With U.S. property/casualty insurance companies experiencing an estimated $15.2 billion in underwriting losses last year, and insurers’ investment income averaging only a 3.9 percent return, insurers are beginning to raise premiums and tighten their underwriting standards, both signs of a transition toward a “hard” insurance market.
The composite rate for commercial property/casualty and specialty lines increased 4 percent in May 2012 compared to May 2011, with workers compensation and property rates increasing the most at 5 percent, reports MarketScout.
We haven’t yet reached the point at which policyholders will see the double-digit premium increases last experienced in 2001, when average quarterly increases topped 28 percent. However, it’s never too early to start preparing.
What does this mean for buyers of New York business insurance?
With the market in obvious transition, businesses should be taking a hard look at their overall risk management and risk financing strategies. By consistently applying safety procedures, educating staff as policies and procedures change, screening new hires and volunteers, properly maintaining equipment and buildings, and keeping disaster plans up to date, New York businesses will be in a better position to negotiate business insurance coverage and rates in a hard market.
Businesses that have a higher portion of their overall premiums in workers’ compensation and property insurance, such as building contractors and food manufacturers, will be hardest hit by the changing market. Renewals on workers’ compensation coverage are averaging premium increases of 5 to 10 percent, depending on loss activity.
A hardening market pushes insurance agents and their clients to focus more on safety, loss prevention, return to work programs, and other risk management tools. With adequate loss control strategies in place, businesses can make themselves more attractive business insurance underwriting risks.
Regardless of the direction the market takes, having more effective risk management programs in place is never a bad idea. Business insurance is often one of largest expenses just after payroll and benefits, so even a five percent increase in business insurance premiums can make a significant difference to your bottom line.
BNC Insurance and Risk Advisors has helped clients weather the threats of hard insurance markets and weak economies. We can help your business too! To learn more, download our case study collection, “How Six Contractors Discovered Risk Management Success With BNC.”
Not a contractor? No problem. We provide all kinds of business insurance. Download our free report, “Ten Unexpected Business Exposures That Obliterate Profit in the Blink of An Eye” to learn more.