The Simmonds Business Insurance Index™ - September

I think I am seeing signs that the commercial insurance market is changing. I know I'm seeing it in the world of bank insurance. Underwriters are asking questions they have not asked in some time. Insurers are declining to quote risks that have a bit of "hair" on them.

There still is plenty of capacity and competition in the commercial insurance marketplace. I am leaving the index unchanged from last month.

     Renewal Premiums: Flat To Slight Increase
     Renewal Coverages: Negotiate
     Buyer's Outlook Long-Term: Prices Increasing

It is still a good time to get competitive quotes on your renewals. Get started early; at least 90 days prior to expiration. If you bid last year or the year before, ask your underwriter for premiums early - tell them you won't bid if they commit 60 days before renewal with aggressive pricing.

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More on Market Changes

Yes, Virginia, there is a Santa Clause.  He is about to turn into Scrooge, though. 


I recently wrote that I am seeing signs that the market is starting to leave the "buyer's market" part of the insurance cycle.


Here's some more...


The editors of the John Liner Letter put out a memo recently with the following:


"In a market already wracked by over $15.5 billion in weather-related insured losses in the United States, many feel that a heavy hurricane season could tip the industry into a hard market. Property insurers will be seeking rate increases for some risks as catastrophe losses continue to erode insurer profits. Insurers are also turning toward an updated Atlantic hurricane model that includes predictions of higher inland wind damage, which could indicate that current pricing and underwriting standards may not be adequate."


They then point out that the industry enjoys a healthy $565 billion dollar surplus.  I have been saying all along that it is the surplus that keeps us in a buyer's market - supply and demand - lots of insurance capacity without high demand.


Predictions of horrible weather abound.  Insurers will use that as their reason to try and increase prices.  I'm not sure what you see.  However, here the local weatherman cannot predict the weather next week.  I don't know how anyone can predict it for next month - or three months.


The key here for insurance buyers is three-fold:


1) Be a desirable risk - If your business has low losses and is well managed and thriving, insurers will flock to you.


2) Be a demanding risk - Set expectations for service from your agent and insurer.  Hold them to your standards.  


3) Negotiate - All aspects of every insurance policy are negotiable - coverage, price, and service.  You must be in a position of strength.  Know what you are asking for.  Know the insurance marketplace.  Know what you can ask for.  Practice great negotiation skills.


The John Liner memo mentioned above counsels preparedness and loss prevention.  Absolutely true.  There is more though.  There is always more.  You must have knowledge on your side.

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