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Vic Ranges - Another Steep Price Increase 19-Feb-2004 At 10:07:03 PM glacier-rat

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further to my last post:

The primary factor driving the increase in liability premiums is that insurers just have not been making money on liability policies for quite some time. To keep it very very basic, (no one wants page after page of explanation).

Factors working into the increase are not limited to just increases in the amount of claims insurers have faced recently, it extends to include factors such as:

. The increase in cost of re-insurance (insurers insuring part or all of their risk with another insurance comapny either locally or on the global market)
. decrease in capacity (the amount of insurance available in the local and global market for reinsurance)
. Harder re-insurance treaties
. Recent massive losses in the insurance industry which have a flow on effect throughout the economy (sept 11 - somewhere around the US$50,000,000,000 last time i checked, but constantly increasing)
. increase in claims being brought against insurers
. premium corrections due to harder conditions of business (solvency issues after HIH, stricter guidlines etc)
. increase in costs of professional services (minimum impact)

thats very basic, but outlines some of the driving factors in premium increases.

options that may or may not be available to reduce premium costs are things such as:

.higher self insured retention (SIR - otherwise known as an excess), where you accept (where you pay) say the first $50,000 of each and every claim with an aggregated limit (depending on insurer and policy wording), however for the smaller scale business's the premium saving would not outweigh the risk of taking on the SIR risk.

.Comprehensive site & practice surveys, which will give underwriters a better understanding of the risk involved (these surveys can be quite costly though)

. using a foreign insurer (you must seek professional advice about this before considering it as an option)

Liability (be it, public, products, professional indemnity, errors & omissions, directors and officers, trustees liability et al) will continue to rise for the next couple of years at least.
its very hard to estimate premium increases and requires a lot of research and benchmarking of the market, the insurers willing to provide capacity and more, but i would expect no less than a 5 -20% increase for forthcoming policy renewals dependant upon the type of risk, the annual turnover of the company, claims history (company and industry).

and before the wave of "insurer friend" abuse starts, let me just clarify that i dont work for any insurers, i work for my clients to gain them the best cover at the best prices, and i am not associated with any insurance company.

regards
dan