The pandemic has had worldwide effects on labour and supply trends which have trickled down on our economy. One of the outcomes we’re currently facing in 2022 is inflation. Inflation touches every aspect of life in the United Kingdom and business insurance is no different. Commercial insurance market costs have increased significantly in the past year, causing consequences for insurers and policyholders alike.
Business Insurance Trends
The commercial insurance market has been affected by reduced reserve levels, weaker underwriting performance, and unpredictable claims trends. All of this has resulted in losses for insurers and greater costs for businesses seeking or holding insurance policies. Yet the consequences are not equal across the board. Certain lines of coverage for businesses are affected more than others. Business Insurance experts predict there are two insurance lines for businesses that are at higher risk for inflation consequences.
Commercial Property Insurance Costs
Property insurance costs will likely increase due to the fact that the cost to repair or rebuild structures following a loss has risen substantially. Worker shortages in the construction industry have led to increased labour costs and simultaneous supply chain issues (mainly for essential building materials) have resulted in the skyrocketing of the price of building materials. Lumber and steel, floor and window coverings, major appliances, and general construction materials are some of the hardest hit by price hikes. With property loss costs, insurance companies are facing low underwriting results which typically leads them to increase the cost of property insurance for policyholders. Insurers may also add more restrictive coverage limitations as an added protection for losses.
All in all: your commercial property insurance prices will likely increase.
Current Commercial Motor Insurance Prices
If you’re in the market for a personal or commercial vehicle, you’ve likely witnessed the skyrocketing costs for vehicles. This is mainly due to motor industry worker shortages which result in increased labour costs and supply chain disruptions for several critical vehicle parts and thus vehicles overall. Most specifically, motor parts, vehicle repairs, and used cars and trucks have become hard to find. Of course, these disruptions flow into the motor insurance market as well, where vehicle repair expenses and related claim costs have jumped. Since people began travelling and working again more post-pandemic, accident frequency and the severity of such accidents have risen, resulting in higher medical and overall claim costs.
What does that mean for commercial motor insurance? Of course, increased loss for motor insurers leads to increased insurance costs for businesses with fleet vehicles. As a business owner who needs to purchase commercial fleet insurance, you’ll likely pay a higher premium and have more limitations on your insurance coverage.
For more information on managing your insurance costs contact us on 01926674875 or email [email protected]