"Business Insurance, Brace Yourself For A Hard Market"
By: Thomas M. Kallman
The events of September 11, 2001 have had a far-reaching impact on our society including the insurance industry. You may have read articles concerning the financial effect on insurance carriers (estimated to be $50 to $80 billion) and speculation that the claims paid would eventually cause rate increases for insurance coverage.

Your insurance agent should do their best throughout the year to keep you informed of changes that you may anticipate as your business insurance policies come up for renewal.

Your insurance professional should represent literally dozens of insurance carriers. These carriers do not operate in unison. Some were directly impacted by the losses suffered in the terrorist attacks and many were affected indirectly. Because of this, each insurance carrier is responding to September 11th in their own way which makes forecasting difficult. I expect that many property and casualty clients will receive rate increases in 2002. Your agent should do whatever they can to give you as much advance notice as possible on major rate increases.

The rate increases, while unexpected, do not come as total shock to industry insiders. Prices for commercial insurance coverage had already been inching up 10 to 15 percent or more before the attack, primarily due to increasing costs for medical care and legal settlements. .Most insurers are paying out more in claims than they are taking in premiums wise. So far, they have been able to make up the difference through their return on investments and still earn a profit. .Now that the return on investments is not quite what it has been and losses in insurance are rising, that will lead premiums to increase.

A dramatic upturn in commercial property rates by fall of 2000 has continued into 2001 and 2002, and the aftermath of the Sept. 11 terrorist attacks will most likely drive rates up even further, Already stung by deepening economic crisis, local businesses are in for another shock; rising insurance premiums and diminishing coverage.

The terrorist attacks in New York and Washington are multiplying the effects of an already hardening commercial insurance market. Commercial insurance coverage's are becoming increasingly difficult to procure and the cost of coverage for commercial property, liability and business-interruption losses are on the rise. The message is relatively consistent. Most business owners can expect to see their insurance premiums go up in 2002 with some coverage restrictions. Your insurance agent should be providing you with many options to help your business contain your insurance costs. In cases where you have received a dramatic premium increase, they should work with you to recommend changes to your program that may help contain your costs.

Thomas M. Kallman is President of TMK Risk Management Inc Dba Kallman Insurance Agency PO Box 266736 Weston, Florida 33326. 954-389-5897 www.tmkrisk.com

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