The State of the Insurance Market

February 15, 2023

When it comes to both business and personal insurance, we see a lot going on. Rate Increases, Increased Cost of Reconstruction and tight Underwriting Guidelines are all affecting our pocket books. So, what can one do about it?


Rate Increases and Tight Underwriting Guidelines are a normal part of the insurance market today. As an Independent Insurance Agent, we are not exclusively contracted with one insurance company, we have options to offer quotes with different insurance companies. Additionally, we can review your discounts and deductibles for premium savings. In many cases we can keep insurance costs about the same as expiring policies.


The increased cost of reconstruction is real. This is true for business owners and homeowners. The labor market is very competitive, and it is difficult to keep good employees. Thus, construction businesses are paying employees more and when coupled with the increased cost of building materials the increased cost of reconstruction is passed on to the consumer in the form of higher property limits resulting in higher premiums.  We had one insurance company tell us that they were increasing property rates at renewal by 20% without looking at any reconstruction cost tools to justify the increase. That is crazy! And, for most of us, that looks like a 20% rate increase. Other companies are increasing business personal property limits and justify it with inflation data. These limits might not be accurate. Remember, insurance companies need to collect enough premium to pay for future claims. Business owners want to control costs.


When we see this, we review three things: Reconstruction Estimators (limits of Insurance), Discounts/Premium Credits and premium savings from Increasing Deductibles. The reconstruction estimators are excellent tools that provide a guesstimate as to what it would cost to rebuild a building/home. Insurance company underwriters will accept these and the new building limits. Many times, these limits are lower than what the insurance company is demanding. There is a direct correlation to the building limit and the cost of insurance. Insurance companies will offer discounts for alarm systems and for multi policies. They will also offer premium credits for profitable clients. We review these for our clients at every renewal. As a means of last resort, we offer higher deductibles which can realize premium savings and cost control.  


While the current market is one reflecting increases in costs, there are ways to offset the increases. Check in with us and we will see what we can do!