Knee Jerk Rate Changes are on the Horizon

I have been in this industry for over 25 years. I continue to scratch my head on how the rate cycles of soft and hard markets continue to be part of this business. However I find myself confused. For the last 5 years the industry has been in a soft market and rates have fallen. This has been good for my clients, especially during this tough recession. 2009 and 2010 should have been the years that the insurance companies would have started to slightly raise rates to cover the growing number of losses that are developing. Rates however are continuing to fall. I am warning my clients to get ready for the knee jerk reaction of rising rates that the industry is most likley going to do. Instead of a discipline approach to proper rates to cover losses, I will most likely be trying to explain to my clients why rates went up 25% overnight.  This is the one of the most frustrating  things that I deal with as an agent/broker. Oh well, the day is arriving soon and I am getting ready to try to explain to my clients what is going to happen. The good news is I have a lot of companies to choose from so competition will lessen the pain for my clients, but no matter knee jerk rate increases are coming. Stay tuned.  Until next time be careful out there and know your risks. K

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