July Reinsurance Renewals, A Change in the Market?

With the July reinsurance renewals fast approaching, many are wondering if the commerical insurance market will harden up. Most commercial insurance buyers are expecting rates to flatten but not go up. If the insurance industry thinks it can increase rates rapidly to make up for the years of underpriced exposures, they need a reality check. As I meet with small business owners each day, they are struggling to keep the doors open. Their cash flow is tight, and work is limited. Their, customers are thin and orders are spotty. The economy is just not rebounding as now indicated from recent economic reports. The best thing the insurance industry can do is to hold things steady. Allow the economy to pick up, then gradually adjust rates to proper levels.  Well, I know this is not how it will play out. Competition will continue to cause rate reductions until losses build to such a point that the industry has no choice but to "knee jerk" rates back up which means another burden on small businesses. Gosh, I hope I am wrong. Until next time be careful out there and know your risks. K

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