Thursday, May 20, 2010

SME business insurance - changes are afoot.

Small business insurance premiums are on the increase. This is not something to be too worried about if you are a business owner, but you do need to be aware that there is change in the air.

If you look back over the past 10 years, inflation has nudged up to 5% and is now back down around 1 or 2%, depending on which measure you look at.

If you were paying £1,000 for your premium 10 years ago and it had risen annually by an inflation rate of 2%, your premium would be £1,218 this year. Adding inflation at 2% is only a way for the commercial insurance companies to effectively, stand still as costs increase for most products and services.

But, insurers have not been sensible enough to gradually increase the premiums by the odd percent here or there. The ones that have been out there grabbing the business have been doing so at extremely uneconomic rates. So, we are now at the stage ten years later when some insurers are starting to say to themselves that they really should start to increase premiums. The stark reality is, that if they don't, their very survival is at stake.

The ones that are in worse trouble are the ones that will need to reverse the costs (increase their premiums) very quickly. This is why certain trades are finding that, instead of the low single digit percentage increases which they would gladly accept, they are getting renewals at an increase of 15, 20 or 25%.

This seems to be affecting the smaller policies (smaller means less than £2,500 annual premium). So it is the likes of shop insurance that are bearing the brunt of the increase. The bigger premiums are what the insurers really want, and they are still too scared to increase these premiums.

If you are faced with a hike in your renewal premium, and you have been claims free, then you really do not need to worry or feel that they have singled you out. The insurers are really saying that the good times have come to an end (for them) and the only way they can get them back again is by charging you more money.

But, you have the right to move your insurance. If they are not going to reward you for loyalty, then take your loyalty elsewhere. It has never, ever, been easier to look around for a cheap business insurance quote, than in 2010. As soon as you get your renewal offer in from your existing insurer or broker, you should start to look elsewhere. Most online independent business insurance brokers will deal with an enquiry over the phone. A ten minute phone call is all it takes to set the wheels in motion for them to look around to find you the better deal.

It is your choice and only you can start to roll the snowball down the hill. You will find though that once the process starts, you will wonder why you have not done this each and every year since you started to trade.

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