Commercial Insurance Rates Continue to Rise


What’s driving the hard insurance market for main street businesses?

Ohio has always had a very competitive insurance market for small commercial businesses. As a result, premiums are lower than those in many neighboring states. However, rates have been trending up in several areas for the past several years and terms and conditions are being constricted. Forms that once were being added at no charge may not be removed or kept on your policy with a premium being added into the base rate.

There are several factors that affect this hardening of the market that are specific to classes of business I have listed below, but other issues are having effects on the entire industry. These include rating agencies looking at underwriting profit as opposed to profit after investment gains to keep their excellent ratings. Another issue pushing up expenses is a labor shortage in the industry. As expenses increase so must premiums.

The commercial automobile insurance market has been in a hard market for a prolonged period of time, something that had not been experienced in the past 30 years.

Underlying issues driving market conditions:

Driver Shortage – Inexperienced drivers are involved in more accidents driving up insurance losses.

More Miles Logged – As more miles are driven and the highways become more congested accident frequency increases.

Vehicle costs are rising faster than inflation – As the cost of vehicles increases due to built-in technology repairs, costs rise.

Social Inflation – increased litigation, broader contract interpretations, and larger jury rewards also affect costs.

The commercial property and liability market has started to harden over the last year.

Underlying issues driving market conditions:

Building Materials – The cost of building materials has risen rapidly over the last year. As material costs increase, the rebuild cost of buildings increases, increasing payments on property losses.

Reinsurance costs – As property reinsurance contract costs increased due to additional opportunities for reinsurers (selling to a larger pool of insurance companies) the premiums charged by retail insurance companies will increase.

Social Inflation – The same issues that are affecting automobile premiums are occurring in general liability losses.

As market conditions continue to change, the Trusted Choice insurance agents at Richey-Barrett are proactively addressing these issues with its clients and prospects so they are not caught off guard when their policies renew. So, before you renew your policies contact Richey-Barrett Insurance.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>