If you are a business owner, you may have noticed that commercial property insurance rates are going up. There are multiple factors contributing to these premium increases. As a business, it is important to know why your insurance costs are on the rise and what you can do to help mitigate the impact.
Catastrophe Losses
The increase and severity of catastrophic events continues to put financial stress on the insurance industry. Hurricanes, floods, winter storms, windstorms, tornadoes – no matter where you live, weather related catastrophes can strike hitting residential and commercial property owners alike. These catastrophic losses come with catastrophic costs. Last year alone, total insured losses globally were estimated at $140 billion.
The Cost of Reinsurance
Reinsurance – insurance for insurance companies – is directly impacted by the cost of catastrophe losses. In addition, inflation, the invasion of Ukraine and the state of the current economy are causing reinsurers to increase premiums to insurance carriers, and be more selective and restrictive in the coverage they’ll provide, which causes insurance carriers to assume more risk. More risk to insurance carriers translates to more premium for that risk for consumers, for the sake of financial solvency.
Inflationary Pressures
Inflation has a considerable impact on the insurance industry and insurance costs. The higher cost of most goods and services results in higher cost to replace or repair your home or auto, therefore increasing the amount of insurance coverage necessary to repair or rebuild your business. Higher claim costs have significantly eroded most carrier’s financial strength, so rates need to also go up, creating a very difficult time for the insurance industry.
Property Replacement Costs
Due to inflation and supply chain disruptions, it costs considerably more than it did one year ago to replace insured property. In the past three years, construction costs have increased dramatically. Structural steel costs have soared 55 percent and lumber has gone up 35 percent. Machinery and equipment costs have also gone up 18 percent in the same time period.
Skilled Labor Shortages
In addition to the strain of increased material costs, and decreased availability of those materials, the construction industry is also facing a significant skilled labor shortage. Contractors are struggling to find skilled labor, despite offering higher wages, which is delaying projects. Higher materials costs and project delays may trigger an increase in business interruption losses as well.
Talk to a Brooks, Todd & McNeil Agent Today
Our agents can help review your current policies and identify if you have any uninsured or underinsured risks. We may also be able to identify a more affordable policy with another insurance company. Reviewing insurance policy options thoroughly takes time, and contrary to what some television commercials might have you think, it’s far more important to be insured properly, than it is to choose an option quickly, which can easily be inadequate. Our agents will do the heavy lifting and then provide you with your most appropriate options for consideration. Since we work with over 20 Commercial insurance carriers, we can find the right fit for you and your business.
If you are looking for new commercial property coverage, our team can help you there as well. No matter the stage of your business, we can help you secure any type of business insurance coverage you may need, barring extreme circumstances. We can help with commercial property insurance, liability insurance, business interruption insurance, workers’ compensation insurance, auto, umbrella, professional coverage and much more. Call our team today at 1-800-448-4567.