Insurance Rates on the Rise Once Again & How Your Business Can Prepare
December 28, 2020
Insurance Rates on the Rise Once Again & How Your Business Can Prepare

Over the years, one thing has remained constant in the world of an insurance agent, the ever- increasing cost. Every year, your business is probably paying more than they did the year before for premiums. Most customers focus on their personal performance and respond to the increase by saying “but I’ve never filed a claim before,” which is the most popular answer received. While that may be true, that doesn’t mean that the business down the street didn’t and insurers do not like losing money. While losses are not the only driving factor in this equation, it is the one this article will focus on and some things you can do to prepare.


Hard Market

Studies are showing an average forecasted rate increase in the double digits in most lines of business with worker’s compensation being one of the few exceptions. Medical malpractice continues to be the loss leader with their rates set to hike as much as 17% in 2021. Litigation factors such as large jury awards and general attitudes of empathy towards the plaintiff are driving payouts to the upper limits.


Directors and Officers renewal offers are estimated to seek double digit rate increases and D&O premiums could easily double for some industries. Again, the rates are driven by large lawsuits being filed against employers- both in terms of the number of cases and the size of the awards. This line is also seeing a rise in class-action securities cases which are driving profits down and rates ever higher.


Commercial Auto has long been a rating loser for companies. Again, there’s a lot more at play than one company or one person’s driving record here. Carrier loss ratios continue to deteriorate due to large auto losses from litigation efforts. Underwriters are under pressure to write a profitable book of business and therefore are more thoroughly underwriting risks, crossing their T’s and dotting their I’s.


Like litigation is to liability, natural catastrophes are a driving factor in the increase of property premiums. Recent uncontrolled wildfires, hurricanes, tornados, and droughts have hit certain areas and have resulted in losses that have decimated company profits triggering insurance carriers to find ways to make up for their losses. More extreme weather patterns make historical loss data insufficient and current rates are not reflective of the unpredictability of the cost of losses so you can expect property premiums to rise with the tides, so to speak.


How Can Your Business Prepare?

There are things that you can do as a business to better prepare for the upcoming years of unknown market pricing. Step one is to talk to you agent. Don’t hide from your insurance agent, ask them questions, hold them accountable, ask how they can help your business to help control risk. They should have ideas on how you can improve safety, reduce risk and ultimately save your bottom line.  He or she may have ideas on how you can reduce the costs of insurance by either retaining more of the risk in higher deductibles or by adjusting policy limits.


Insurance is only one tool that a business should be using to protect their most important asset. There are additional policies and practices that can be put into place to help your business prevent litigation losses from happening in the first place. Talk to SimcoHR and find out about how our HR consulting packages can help you be better prepared in the event of a lawsuit, or more preferably how to avoid that lawsuit in the first place by making sure that your business is in full compliance with all laws, advice on how to handle employee issues and the latest news and updates in this ever changing business environment.

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