The Rising Cost of Insurance and How to Cope

There is no denying that insurance costs across the board are beginning to rise.  For the past five years insurance costs kept on diving and diving, dipping lower and lower than I have ever seen before in the marketplace.  Insurance carriers were writing risks at alarmingly low rates that I knew would not be able to be sustained.  One of my previous bosses used to call those carriers "the flavor of the month".  And boy was he right.



Now fast forward to this year.  Carriers are beginning to tighten up their reigns and become more
strict on what they will accept and what they will decline.  Minimum premiums are beginning to rise again and you most likely are seeing more carrier declination's from your broker than quotes.  Some carriers that flourished during these tough times are at "capacity" and not writing any new business.  Ahhhh, the flavor of the month.   In turn, some of my clients are having to now scramble, move carriers yet again and take a substantial premium increase due to choosing those insurance carriers.

A few things to note during these times.

1. It pays to stick with an insurance company that is established and not premature to the marketplace.  Your premiums may be a bit higher than the "flavor of the month" insurance carrier.  But if you can afford the few extra dollars, stick with the more secure, proven carrier.  You will save money in the long run.
   
   
2. Check up on your insurance carrier.  Go to AMBest and look at your insurance carrier's rating, if it is not on your quote that the insurance broker provided.  Typically, anything under A- VII you should avoid as their financial situation may be a little shaky.
   
   
3. Don't be afraid to ask your broker to market your insurance renewal out.  This is their job!  Specifically request a marketing summary of insurance carriers and their responses upon renewal.  This not only helps avoid assumptions that your broker didn't do his or her job, but it also keeps you in tune with what the insurance marketplace is doing.  Are insurance carriers quoting high premiums or are they even quoting at all?  Or are there only a few carriers that will entertain your type of business?  Market, market, market your insurance renewal.  Knowledge is power.
   
   
4. In 2013 and 2014 I would suggest paying close attention to your workers compensation and professional liability lines of insurance.  These are the two lines of insurance that I have seen get hit the hardest in the past year.  Workers compensation rates are rising rapidly and professional liability premiums and deductibles are fluctuating swiftly from carrier to carrier.

The good news is that the even though the flavor of the month's are beginning to be plucked from the pack, the insurance carriers that are remaining will continue to be reliable and successful which should be of comfort to you and your company.  Knowing that your insurance carrier will be there through tough claim situations is what you really want and need.  

If times are hard and you can't afford to stick with Mr. Reliable Insurance Carrier and are forced to go with the Flavor of the Month Insurance Carrier...it's OK.  But just try and get back to that reliable carrier as soon as you're able to.  Your pocketbook will thank you!