Like the classic I Love Lucy scene where Lucy crams candies into her mouth in response to the increasing speed of the conveyor belt, insurance has been trying to keep up with the frantic pace of catastrophic events.
The result is what's known as a hard market. Although it may take longer to find the right coverage for your business in this challenging market, our agents work with you to find coverage. Keep reading to find out why the market is so challenging right now and how we can help.
High prices, strict underwriting and little flexibility
Insurance is in a hard market, which means rates are rising and insurance companies are becoming more selective about what client they'll accept. In the wake of the pandemic, the industry is experiencing an unusually high number of claims, from auto accidents, to property damage and liability lawsuits.
As a business owner, insurance probably feels overwhelming already, even without the unusually high price tags you're currently facing. Now is an ideal time to get professional guidance and seasoned advice on choosing commercial insurance that's going to respond when you need it. As the pandemic has taught us all, the difference between a good safety net and a bad one can be the determining factor between a strong, resilient business and bankruptcy.
The impact of inflation on insurance premiums
Rising inflation means increasing insurance premiums in response to the economic climate (also complicated by a pandemic backlash). In addition to supply chain woes, the worker shortage continues as the cost of labor and materials skyrockets. Weather events rack up annual catastrophic losses putting reserves and reinsurers in a tight spot. The cost to repair or replace things is much higher, and premiums reflect that shift.
Social inflation and the hardening market
Social inflation is on the lips of many agents (and lawyers) because it's been a driving factor in increased insurance costs. Social inflation is an industry term that refers to the rising cost of litigation, a widening lens on liability and jury verdicts resulting in higher awards. Some lawsuits, for example, have fetched jury verdicts of over $10 million (known as "nuclear verdicts"), which have only exacerbated the hardening market.
With that kind of money at stake, more plaintiffs are taking their chances at trial or countering rather than accepting initial insurance settlement offers. Paying it forward, in the case of insurance, means passing higher costs to the consumer.
Supply chains are also hardening the market
Thanks to the pandemic, you'll never be in the dark about supply chains again. In the early days of COVID-19, limited access to paper products and electronics cleared the path for supply chain discussions. Suddenly the interrelated economy became part of normal dinner table conversation. Can't get a laptop for months? It's the supply chain. Toilet paper shortage? Thank the supply chain.
The supply chain and social inflation might even send certain types of insurance into a supply shortage of their own as insurance companies depart riskier markets. That means more competition with fewer insurance companies to absorb particular risks. It's no longer a buyer's market.
We're your secret weapon in a hard market
Independent insurance agents like us serve our clients' best interests, not the insurance company's. Even in a hardening market, we will search for insurance that fits your needs and budget. We know which insurance companies are poised to take on your industry risk and which ones aren't worth trying.
How we can help
It's important that we have enough time to shop around for you. Carriers are becoming more risk averse and underwriting requirements are increasingly extensive. We'll assess your operations and share this information with carriers to ensure they're comfortable with the risk. Because of the diligence required, this process can take more time than it has in the past. We're an independent agent, which means we'll also check with multiple carriers to find a good fit.
We can help you market your business to make it appealing to insurance companies. For example, if you have a history of injury claims but have been proactive about employee safety training, we can help you present that info to an underwriter in the best possible light.
If you've got a few dings on your record, you might need to pay more for coverage. Alternatively, you may choose to take on more risk yourself in the form of higher deductibles, lower limits or less comprehensive coverage.
Going it alone or rolling the dice on a policy recommended through an online form won't get you a personalized approach. Vying for the cheapest policy is tempting, but a cheaper policy can also mean more exclusions and less coverage. And those are the policies that tend to go radio silent when you need help handling a claim.
Call us for a coverage review
If you have concerns about an upcoming insurance renewal, be proactive and give us a call. We understand your frustrations about higher insurance prices and can help you get the coverage you need at an affordable price.