The Simmonds Business Insurance Index™

Designed to provide business insurance buyers with a gauge by which to judge their renewals, The Simmonds Business Insurance Index™ is a compilation of data from client renewals, reported renewals, news reports, and producer input. The sources are both national and regional.

The index indicates an overall trend of premium and coverage changes business insurance buyers are experiencing at policy renewal, for all lines of property and casualty insurance.

The "Renewal Premium" section indicates an average premium change across a broad range of insurance buyers. Your own premium change may vary from this based on your industry, your loss experience, and your insurer's appetite for your risk.

"Renewal Coverages" indicates the availability of broadened coverage terms. Liberal indicates that insurers are offering broad terms and expanded coverage features such as expanded liability protection and broad property insurance protections. Conservative means that insurers are reluctant to expand coverage enhancements.

The third indicator measures the overall market trends.

Any insurance buyer wishing to contribute information to be used in the index should contact us at Scott@ScottSimmonds.com.

The Simmonds Business Insurance Index™ April, 2011

Renewal Premiums -5%

Renewal Coverages Liberal Terms

Buyer's Outlook Long-Term: Prices Flat - Soft Market Continues

Index History

Date	Renewal Premiums	Renewal Coverages	Buyer's Outlook
April, 2011	-5%	Liberal	Prices Flat-Soft Market Continues
March, 2011	-5%	Liberal	Prices Flat-Soft Market Continues
February, 2011	-5%	Liberal	Prices Flat-Soft Market Continues
January, 2011	-5%	Liberal	Prices Flat-Soft Market Continues
December, 2010	-5%	Liberal	Prices Flat-Soft Market Continues
November, 2010	-5%	Liberal	Prices Flat
October, 2010	-5%	Liberal	Prices Flat
September, 2010	-5% to Flat	Liberal	Prices Flat
August, 2010	-5% to Flat	Liberal	Prices Flat
July, 2010	-5% to Flat	Liberal	Prices Flat
June, 2010	-10%	Liberal	Prices Flat
May, 2010	-10%	Liberal	Prices Flat
April, 2010	-10%	Liberal	Prices Rising
March, 2010	-10%	Liberal	Prices Rising
February, 2010	-12%	Liberal	Prices Rising
January, 2010	-12%	Liberal	Stable

Notes for April, 2011

No signs of any change. I realize this seems monotonous. However, its great news for insurance buyers! My comments from March and February stand.

Notes for March, 2011

I continue to see every indication that the commercial insurance marketplace, as a whole, will continue for at least the next 6 months as a buyer's market.

Agents keep telling me that they are seeing firmer prices. However, when the actual renewal quotes come in, the prices continue to drop when there is competition for the account.

A recent gathering of insurance executives in Maine included a panel discussion on the future of the market. The room was filled with insurance agents and insurance company people. Many made comments about the current inadequacy of premiums and low-price foolishness. Frankly, what I heard was a complete lack of understanding about how free markets work. Supply and demand always finds a way... The current supply of insurance exceeds demand, so prices decline. Until insurers walk away from clients (decreasing supply), prices will stay at what are historically low levels.

The other part of supply and demand is that suppliers always want high prices, and buyers always want low prices. Push and pull makes it all work.

Notes for February, 2011

Over the past week I have struggled with what to do with the SBII. Part of me wants to show a stronger premium reduction than what I have been showing for the past few months. Minus 5% just does not seem enough. All I see are signs of further competition and greater capacity in the market.

Towers Watson reported that reinsurance rates are down by as much as 10% over last year. That blew me away. AM Best is predicting further soft pricing.

The renewals that I am involved in and hear about are all exceedingly competitive - both in terms of last year's rates and the number of insurers in the fight.

Of course, I do everything I can to create competition. I love to throw gas on the fire and watch the players duke it out (badly mixing metaphors).

I've talked myself into leaving things as they are for now. Agents and insurers certainly want to increase prices - that is a strong force. However, nobody wants to lose business. The threat of competition keeps things in check.

So, there you have it I am back where I started - unwaveringly undecided!

Notes for January, 2011

There is no change in sight for a move from the current insurance buyer's market. We have supply and demand to thank. Simple as that. The capital / capacity in the insurance business continues to exceed demand. The soft economy and investors have created an environment where there is too much insurance chasing the policies being purchased. Supply outstrips demand - prices drop. As an enticement to policy buyers, insurers continue to offer broad terms and coverage.

Yea for the insurance buyer!

I continue to see insureds who are saving 40% in bid situations where the insured has not bid their coverage in over 5 years - it happened three times in December. My 5% reduction in the index is an average for accounts that have been into the marketplace in the recent past.

I repeat...

--Bid your insurance every 3 years

--Work to make your business an exceptional risk

--Be sure you have a great insurance agent

--Negotiate your renewals for better pricing and better coverage

Notes for December, 2010

The insurance market "experts" seem to have given up on the marketplace "hardening" any time soon. There have been several articles in the past few weeks predicting that the market will not change in 2011.

The November 15th edition of National Underwriter touts on its cover that the soft market is the new normal.

That may be good news for insurance buyers. I'm not convinced.

The older I get, the more I realize that when the mass of "experts" are saying that something is going to happen, the opposite is most often true.

In the past month I have handled about 15 renewals. Several increased in premium by 2%. Several dropped by 30%. Most dropped by about 10%.

Those that dropped the most had not been out to bid for several years. They were also the best accounts - highly desirable to the underwriters.

I repeat...

--Bid your insurance every 3 years

--Work to make your business an exceptional risk

--Be sure you have a great insurance agent

--Negotiate your renewals for better pricing and better coverage

Notes for November, 2010

No change from October. No change in the index and no change in my advice.

I see no change in the current insurance marketplace and no signs of prices firming up. With no competition for your account, you will see your premiums stay about the same. With competition on the renewal, you will see reductions and improvements in coverage.

At the end of the renewal, negotiations continue to push for coverage enhancements. Ask the underwriter to throw in earthquake coverage or the elimination of an exclusion.

Here are some of the things I am asking for:

--Earthquake
--Flood
--Defense costs outside the limit of liability on professional liability
--Lower deductibles
--Expansion of debris removal limits
--Per location aggregates on general liability
--Wage/hour claim defense costs on employment practices liability
--Removal or limitation of the known dishonest act exclusion on crime insurance
--Per loss deductible to combine property insurance and inland marine deductibles
--Employees as insured on auto policy
--Cybercrime

Notes for October, 2010

I have seen no real change in the insurance marketplace this month. I am, however, changing the premium part of the index to -5%. Since July I have shown "-5% to flat." I'm not convinced, in hindsight, that flat is really where the market has been/is. Competition still will push your premium down.

I was interviewed a few days ago for a business website. I said, "If an entrepreneur renews his insurance with the same agent and the same insurer with no "push-back," his renewal premiums will increase @5%. Renewing with the same agent/insurer with push-back will result in a slight reduction or a flat renewal. Competitive bidding will result in a 10 to 20% reduction in premium. The trick is how you manage the bid process."

I also talked about the magic of six words, "Is that really your best price?"

The writer expressed surprise that business insurance premiums are negotiable. They sure are. Most underwriters can increase or decrease base rates by 25%. That's a 50 point swing!

I have long said that a great deal of the discretionary part of premiums is dependent on how the insured appears to the underwriter. Is the insured an attractive risk? Does the agent present the account in a favorable way?

The insurance press continues to predict a soft market for the rest of this year. I agree. I am urging my bank clients to lock in the bond and directors' and officers' premiums for 3 years.

Prices will go up. The problem is predicting when. I do know that bringing competition into your renewal will improve your coverage and premium.

Notes for September, 2010

I'm leaving the index right where it is.

I have no reason to change anything here. I see the marketplace as firm in its competitive position. Maybe it's that people spent August on vacation. Maybe it's the heat. Who knows?

All the ideas I have been spouting still hold for insurance buyers: start renewals early, show off your management strengths, prove you are an exceptional risk, bring in competing insurers and agents to push your premium down and your coverage up.

Notes for August, 2010

The best way to describe the current insurance marketplace is confused.

Underwriters want more premium. However, competition is preventing them from inching premiums up. At the same time, uninformed buyers are in a mode where they almost expect premiums to go up based on the overall sour economy.

That attitude allows insurers to bump premiums by 5% with very little push-back. However, if there was pressure on the underwriter, the premium increase will go away.

Uninformed buyers are allowing their premiums to increase.

I continue my advice from prior months: If you have not bid your insurance in a few years, get out there. You will pay too much for your insurance this renewal without some competition - even if it is just rattling your agent's cage a bit.

Start the renewal process early - 120 days minimum. If you are not bidding, tell your agent that you expect your renewal rates to drop by 5% and that you want confirmation of this by 90 days before renewal. Without that assurance, go to bid.

Notes for July, 2010

The latest round of renewals shows underwriters being more reluctant to credit renewals. I am also starting to see coverage restrictions discussed. The market is certainly not firming up - meaning it is still a buyers market. Underwriters are tiring of getting beaten up.

Any renewal without negotiation will result in premium increases. Let the insurance company determine your price and they will hit you with a higher premium. This is the way of the world, not an indictment of insurance companies. Insurers (and agents) have no incentive to leave money on the table - why would they?