Insurance Companies will "knee jerk" rates

The 2011 combined ratio predictions came out today and it looks like the insurance industry lost money on underwriting, again!. The industry continues to defy basic underwriting principles to compete for growth. This strategy is usually "saved" by investment income and claim paying practices where cash out is always slower than cash in. In 2012 the industry is trying to raise rates a little to test the waters of the economy. My prediction is that most business owners and premium payers are just not going to be able to afford much in increases. If losses continue to mount, the industry will force its will and knee jerk rates back up 20-25% to make up profits. I know this because I have seen it before in 25 years of being in the business. When it will happen is still uncertain but my guess is sometime in 2013. We will see, but as a business owner you better squirrel away some premium money. Until next time be careful out there and know your risks. K

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