The Credit Crunch and Your Premiums

No industry is immune from the effects of the credit crunch, and the insurance sector is no exception. Since 2005, rates for many types of insurance policies have reduced, although some premiums may have increased to reflect business growth.

The  cumulative  impact  of  these  rate reductions, however, has affected  the results of  major  insurers,   leaving  the  industry  in a position where the cost of claims and expenses are  exceeding the  premiums  paid by customers. Past shortfalls may have been covered by  interest    earned  on   reserves (kept  aside  to  pay  for  outstanding  claims) but,  as  interest   rates  have  fallen,  so  have these  resources. Many Insurers are now looking to increase rates  for the remainder of 2009 to balance  their figures.

Each insurer has its own plan, but most look at each customer and make a decision based on a combination of their past claims, their risk profile, and the claims trend for their particular business  sector   and   class  of  business.   It is impossible  to  predict  with  certainty,  but overall rates  are  expected to rise by around 5% in 2009, with some  increasing  by more and others not changing  at all. For customers where activity is reducing, rates may increase but premiums could still come down.

There is still competition among  insurers  to insure  well  run  businesses  -  albeit  less  so than  in the  past  few  years.  This is because some  insurers have deliberately  reduced the amount  of business they handle,  or become much more selective.

We are deeply  aware  of the  financial strains facing  our  clients  at present and  will make sure your insurance arrangements reflect your current  business  activities.  As a Member of Broker Network, the UK’s longest-established commercial network, we have particularly strong relationships with a host of quality insurers, and will continue to negotiate the best possible deal for you.