Business insurance: how to get the best deal for your money.

Author:Rajt, Michael A.
Position:Q & A
 
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The 9/11 terrorists attacks sent the insurance industry into turmoil. Huge losses from the tragedy and an economic downturn drove rates to dizzying heights. All that has now changed, however. Here are answers to key questions about today's insurance market:

What's happening to rates? Rates are generally trending downward. Premium decreases of 20 percent in the property insurance area are not unusual. General liability insurance rates are decreasing at a similar pace, particularly for those with good loss experience. Even directors and officers liability insurance rates have come down and, more importantly, D & O insurers are beginning to negotiate policy wording again.

Why the change? A number of factors. Among them are significant infusions of capital into the insurance companies themselves in the years following 9/11. The drastic, and some would say overstated, rate hikes following the attacks have made the business significantly more profitable. Improving business profits have increased demand for commercial and industrial space, which has improved insurance carriers' returns on their real estate portfolios. Finally, and probably most importantly, the generally improved performance of the stock market has vastly increased the value of insurers' portfolios and their earnings. This has led insurers to seek to expand their premium volume, which has fostered competition.

How do I take advantage of this? This year is an excellent time to seek competitive quotes. This was not the case in the immediate aftermath of 9/11, but in the current market underwriters aggressively seeking new business tend not to see the blemishes in new business. Losses paid by someone else are much easier to gloss over than losses paid out of your pocket. It is now time to take advantage of this market place by competitive bidding of your insurance.

How do I 'shop' my business? First, make your business a better insurance risk. All things considered, the better insurance risk is the one with the fewest claims and the least claims dollars paid out. That makes the starting point a careful review of your claims history. Request your claims history (insurance companies call these loss runs) from your insurance agent and carefully review the data. Are reserves still posted for workers' compensation claims where the employee is back to work? Advise your agent and the carrier to get those reserves removed. Is there a high reserve as a result of an apparently minor incident...

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