Like many other costs of living, insurance premiums have also been increasing. To help you understand why this is happening, let us first explain what makes up your premium.

Your insurance premium includes:

  • The claims cost
  • Reinsurance cost
  • Admin & marketing

As you can see from the graph, premiums have increased a lot since 2017. Interestingly though, 2021 was the first time that average pricing attained the same level as 2005 (16 years) after 12 years of downward pricing movement.

The Big Increases are in financial lines, cyber & property. 

Why are premiums increasing?

  • Insurers are placing a very strong focus on data
  • A sustained focus by insurers to maintain profitability by product line/industry
  • Expectations of increased Natural Catastrophe claims frequency and severity
  • Expectations of further inflation of Material Costs
  • Expectations of ongoing Supply chain pressures
  • The ongoing escalation of Liability, Cyber, and Professional Indemnity claims settlements
  • Insurer’s crystal ball gazing at tougher economic times (more claims)

How can you minimise your premiums?

  • Ensure you are partnering with your broker to ensure they know everything they need to know about your business. We will work with you to ensure insurers are as comfortable with what you do as is possible. Your broker is on your side.
  • Work with your broker to find ways to demonstrate the quality of your business (e.g. Provide accurate C.O.P.E details, Quality assurance, etc. Good claims history)
  • Don’t be a maintenance claimant. Insurers have contracted to pay claims for unforeseen events but do not want to act as your maintenance program.          
  • Consider what excess level is right for you.  Think about how you would treat certain circumstances if you could not buy insurance.
  • If you wouldn’t do it without insurance. Maybe it’s not a great idea to do it just because you have insurance.

If you would like to review your premiums or have questions please get in touch with your personal insurance broker (for existing clients) or contact us HERE if you are a new client.

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