Talk of hardening rates has been rife over the last few months but it seems the anxiety may have been in vain after data from a leading broker platform revealed premiums have remained flat.
According to
BizCover’s Small Business Insurance Index, there has been little change in prices over the past quarter and rates are currently resting at 80 points.
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“Despite industry predictions of stricter underwriting criteria and higher prices, excess capacity and good levels of profitability have resulted in stable prices and coverage,” said Michael Gottlieb, CEO of BizCover.
Gottlieb, who also founded the online insurance marketplace, said the results prove the industry is healthy and should remain so for the foreseeable future.
“The index shows a thriving, robust industry because both the broker model and the online model are coming together,” Gottlieb told Insurance Business. “We’re figuring it out.”
Gottlieb, who was the manager of San Francisco-based BizInsure for almost six years, says brokers are increasingly leveraging online platforms to enhance their offerings.
“It’s becoming clearer that the broker model isn’t going anywhere, and the relationship between brokers and companies like BizCover is really maturing into one of collaboration and cooperation,” he said.
While premiums in the SME sector have defied expectations to remain steady, Gottlieb says it’s unlikely brokers will see premiums decrease any further – unless a major change is on the horizon.
“Prices are already at historically low levels, so significant further reductions are unlikely,” he told
Insurance Business. “Having said that, leaps in technology are never far away, and as the rest of the industry catches up with the technology leaders increased profitability might allow for reductions.”
Despite the “never-say-never” attitude, Gottlieb says it’s far more likely brokers will see prices hold steady before they take a slight rise in the medium term.
“There is still a lot of competition in the market and insurance profitability remains strong, so I don’t see the cost of business insurance increasing in the short term,” he said.
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