Why are Commercial Insurance Rates going up so fast?
There are many factors causing the rapid rise of commercial insurance rates.
Let's start with the obvious - Increased claims costs: Claims costs are being pushed by inflation, a rapid increase in catastrophic losses and reconstruction costs.
Additionally - in order to mitigate their losses, many carriers are reducing their exposure by limiting or halting business in California - that pushes the remaining insurers to limit the increased new business flow as well as it stretches their reserve capacity (The amount of money relative to premiums the state requires them to have on hand for losses.
And one more factor here is poor investment results - just like you and I, insurance companies depend on investment results to grow their financial strength - and they - like many of us had poor results in 2022. Unlike the government - Insurance companies can't stay in business if they are losing money - It's bad business and the states won't allow it -
In summary - the rising rates are not greed - it's about making sure they are still in business next year - I have attached an explainer from Nationwide to document some of the issues I have mentioned here.
Commercial Property insurance increases.pdf
Feel free to reach out to me with questions at any time
Mike Vanlue
ISE Insurance Services - Ca Lic 0G71702
916-836-8112
mike@iseinsurance.com