The American Property Casualty Insurance Association (APCIA) has taken a look at why commercial insurance rates continue to climb. Spokesman Robert Gordon — who is an APCIA senior vice president — said there are three main drivers that are pushing prices skyward.
“Insurers and agents continue to look for ways to reduce costs while still meeting all obligations to policyholders,” Gordon said. “But as claims and other costs have increased dramatically insurers are under pressure to raise rates on a variety of insurance policies typically utilized by small businesses.”
Here are the three main drivers that Gordon mentioned.
1. Inflation. It has contributed to the increase in payouts for insurers. March 2022’s consumer price index (CPI) leapt 8.5% from the same month in 2021.
2. Abuse of the legal system. Lawsuits against insured businesses often lead to large verdicts. The cost of policies often go to cover the cost to insurers for those decisions. As an example, Gordon said the losses for general liability rose over 57% since 2017.
3. Cyber. Ransoms. Ransoms. Ransoms. They very often top $1 million. Business interruption costs are stuck on top of that.
Small and medium-sized businesses will see a noticeable jump in premiums when they renew their policy, or when they purchase a new one. This is going to be the case even if they have not made a claim in the past year.
Gordon noted a survey from the Council of Insurance Agents and Brokers (CIAB). In the 4th quarter of 2021, medium-sized businesses saw premiums jump 10.6%. Small businesses were hit — on average — 6.3%.
Source link: Insurance Business America — https://bit.ly/3wGPvIl
Commercial Rates Continue to Rise — Here’s Why
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