Why did my Insurance Premiums rise?

Why did my Insurance Premiums rise?

When it comes time to review and renew insurance policies many business owners are asking – why did my premiums rise? It’s a fair question because most types of business insurance premiums have had premium increases, some very large and other not as big, over the past few years. In addition, many business owners would have found that some insurers are restricting cover in some areas of Australia or also no longer willing to offer some types of insurance cover any cost, due to claims.

So why are premiums still continuing to rise and what can you do to manage your risks and the cost of insurance premiums for your business?

Why are premiums rising?

Several years ago, premiums started to increase as insurers were no longer receiving investment income, as interest rates dropped to historically low levels. Insurers could no longer count on investment returns to offset losses due to claims. Premiums started to level off, however vast communities throughout Australia were impacted by natural disasters (bush fires, floods, cyclones and droughts) followed by COVID-19 (issues with supply chains, lockdowns and staffing) and recently, the Ukraine war and inflation. All these problems have combined and have collectively influenced rising costs, whether that’s in food, raw materials, white goods and a range of other categories.

Over the past few years, insurers have paid out billions in claims and assisted thousands of businesses and homeowners to rebuild. However, the cost of natural catastrophes has been rising, unprecedented bushfires and more communities than ever before impacted by catastrophic flooding, with some areas flooded several times.

On the plus side, there seems to be some movement toward funding public mitigation projects to improve building standards and make more informed planning decisions for disaster-prone areas. However, these are long-term plans and won’t immediately alleviate the rising premiums faced by SMEs.

Changes to insurance premiums explained – what’s a hard market?

Rapidly rising business insurance premiums, higher excesses, more exclusions, and less competition between insurers is what the insurance industry calls a Hard Market. This hard market was mainly caused by the cost of claims paid out for recent storms and floods being more than the total premium income they received. In addition, the cost of repairing cars, home and businesses has increased due to supply chain issues and inflations. For example, the cost of key building materials has increased 10% - 30% this year. This directly impacts the insurance premiums that businesses must pay. It is essential that you speak to your insurance adviser, who will work with you to manager your overall risks and suggest the best combination of excesses, cover and insurance premiums for you and your business.

What’s the solution to rising premiums?

Rising premiums mean that business owners need to either obtain professional risk and insurance advice or spend valuable time and resources considering alternatives, including reducing insurance cover. However, reducing your insurance cover exposes the business financially, especially during a disaster.

Which brings us to the assistance you can obtain from your professional risk and insurance adviser, who will help you achieve the best cover at the most competitive premium. That’s because insurance advisers have detailed knowledge of your industry that can help to manage and reduce your risks, providing financial security and certainty to you and your business, especially in these uncertain times. Insurance advisers also have access to specialised markets that generally don’t deal with customers directly. These alternative markets may provide lower premiums or less exclusions than other insurers. Insurance advisers can save you time and money and provide financial security.

For help reviewing your business policies, talk to an insurance specialist today and find your local adviser.

Important Information 

This communication including any weblinks or attachments is for information purposes only. It is not a recommendation or opinion, your personal or individual objectives, financial situation or needs have not been taken into account. This communication is not intended to constitute personal advice. This type of insurance product is designed for small and large businesses, that want to be covered against financial loss relating to accidents or personal injury involving contractors or sub-contractors.

We strongly recommend that you consider the suitability of this information, in respect of your objectives, financial situation and needs before acting on it. This document is also not a Product Disclosure Statement (PDS) or a policy wording, nor is it a summary of a particular product’s features or terms of any insurance product. If you are interested in discussing this information or acquiring an insurance product, you should contact your insurance adviser to obtain and carefully consider any relevant PDS or policy wording before deciding whether to purchase any insurance product.

Business Interruption Insurance

Business Interruption Insurance

From your family and employees to customers and suppliers, there are a lot of people who depend on your business opening its doors each day.

SME Business Insurance

SME Business Insurance

Business Insurance is used by many businesses, but it’s best suited to SME-type operators.

Find your local Insurance Adviser

Talk to your local Adviser to get advice about your insurance needs and to get a quote