The insurance industry is seeing an increase in rates going into 2021. In particular, commercial insurance rates are rising.
As an established local insurance agency in Tyler, Texas, Bosworth & Associates Insurance knows how much of an impact insurance rates have on businesses large and small. Not only do these rates impact a business’ bottom line, but being able to afford the proper insurance can make or break a business in an emergency.
Commercial insurance is to protect your unique business from liability.
Each business’s insurance needs are going to be different. The insurance needs of a restaurant will be different from a hardware store, which will be different from a big box store, etc. Your insurance protection should cover you in the specific areas necessary for your particular business’ needs.
Some need protection in areas that other businesses don’t need to bother with. Especially if you’re working with people or around valuable goods, your insurance needs will be higher. A reputable insurance agent will explain the differences and your options.
The cost of commercial insurance reflects those differences as well. There’s not one “across the board” cost for commercial insurance.
A few of the things insurance companies use to help assign costs are the number of employees a business has, its location, and the policy’s details.
As mentioned above, commercial insurance is necessary to running a successful business. It’s imperative to pay attention to what’s happening with commercial insurance rate trends nationwide.
In 2021, according to “Business Insurance,” commercial insurance rates are rising. And in some cases, rising significantly. They reported that commercial insurance rates in the United States went up by 7.1% in 2020’s fourth quarter.
These rate increases were across the board in industry sectors from transportation to employment practices liability to umbrella/excess liability insurance.
But what is at the heart of these rate increases?
Recent current events such as the global covid-19 pandemic, increased natural disasters caused by global warming, and more social unrest in the U.S. and around the world are the leading causes of commercial insurance rate hikes.
The covid-19 pandemic has significantly affected insurance rates in new ways, but there are other factors as well.
Another aspect is “social inflation.”
Businesses are seeing higher rates because their insurance companies have been taking bigger hits in lawsuits—for various reasons—and are having to make more significant payouts. Down the line, everyone ends up paying more as this has become something of a social trend.
Natural disasters have had a profound impact on these rate increases.
Natural disasters are increasing in frequency in the last ten years. The expenses of these natural disasters have also been growing. The United States saw more than eight disasters in recent years, totaling more than a billion dollars each.
Unfortunately, these more severe and frequent weather events such as droughts, tornadoes, hurricanes, and wildfires are becoming more the norm. With that, insurance rates are rising to meet the increased costs from businesses needing to cash in on expensive insurance policies due to damage caused by natural disasters.
Another area leading to a rise in insurance rates is caused by an increase in costly cyber attacks on businesses. With advances in technology, the threat risks within the cyber world continue to expand and grow. Insurers have to keep up with this new and growing area of risk to businesses. Claims increases mean higher rates down the line.
We’ve put together a short list of ideas for cost-effective, proactive measures your business can take.
Here are some ways to look to the future successfully and cost-effectively when it comes to rising commercial insurance rates:
· Always make sure you document everything and keep those documents somewhere safe and accessible. If you face a litigation risk, this documentation might save your business.
· Do a rundown and ascertain what the minimum liability coverage is you can handle as a business. It’s also a good opportunity to review your business’ other potential risk areas.
· Reevaluate other insurance provider options. Explore what other insurers are offering.
· Finally, stay up to date on what changes are taking place in terms of such trends and rate increases. It’s always good to be ahead of the game when it comes to risks for your business.
If you are a business owner and need more information about commercial insurance policies for your business and/ or employees, the insurance professionals at Bosworth & Associates have been taking care of Tyler and East Texas businesses for over 3 generations. Give us a call and let us know how we can help you.