Nationwide insurance rate increase

A citizen quite a surprise when he opened up an envelope with his new quote for insurance coverage. Instead of a modest 5 percent or 10 percent increase like he was used to, the premium for his shot up more than three-fold,. As far as he knew, no liability claims had been filed against his company to prompt the huge markup. It's the most difficult insurance market for businesses since the mid-1980s. While Nationwide insurance rate increase increases are being felt by every company, which have seen rate hikes for the same amount of coverage. Nationwide, insurance premiums are up, on average, 40 percent over last year.

Some industries are seeing doubling and tripling of Nationwide insurance rate increase rates. The problem is not limited to cost increases. Over the last three or four months, insurers have not been renewing liability policies, even in lower risk industries. The market is being driven by a "perfect storm" combination of factors: A falling stock market that has sapped much of the profit margin for insurers, already weakened by years of under pricing premiums. Many insurers are reducing their coverage. For example, damage allegedly caused by mold is now routinely excluded from most insurers' policies. 

In California, large numbers of construction defect and toxic mold lawsuits have made the liability market even worse, especially for construction-related industries. Several years ago, there were at least a dozen major insurance carriers writing liability policies for construction and roofing contractors; now there are only three in the state--and even they tend to shy away from small premiums under $20,000. As a result, doubling or tripling of liability premiums for firms in these industries has become commonplace after Sept. 11.

Insurers are also charging more for the same coverage limits (a combination of deductibles and caps on dollar value of claims covered). This has resulted in companies seeking lower limits to keep their costs from rising too much, according to Wesley. Marsh last week released a survey showing that businesses nationwide reduced liability limits on their policies by an average of 6 percent. Faced with exploding Nationwide insurance rate increase costs, many small companies are skipping coverage altogether. Contractors may be hit the most severely so far, but firms in the health care, pharmaceutical and chemical sectors have also been hit hard, Wesley said. Even the traditionally low-risk food manufacturing sector is seeing increases in liability insurance after years of flat or declining premiums.