From 2013 to 2023, monthly insurance premiums have risen from $1,558 to $2,726. This marks a 75% increase in just a decade for commercial building owners. This is forecasted to get even worse as, by 2030, insurance costs are expected to be $4,890 every single month. So what factors are driving insurance prices higher for these commercial buildings?
While there are a variety of factors that go into determining insurance price from the insurer’s perspective, the most important consideration is how much a claim will cost in the event of a loss. In 2023 alone, insurance companies had an estimated recovery cost of $92.9 billion. These costs come from a variety of claims, but most stem from the numerous natural disasters in 2023. There were 19 severe storms, 4 floods, and several more large-scale weather occurrences. Consequently, insurers needed to raise their prices accordingly.
From the policyholder’s perspective, however, it is quite costly to see these price increases when little about the building itself has changed. Fortunately, there is a way to mitigate these costs. By getting a commercial building regularly inspected and proactively maintained, it becomes a much more favorable risk. Most insurers will provide a credit to the policy for simply getting annual inspections done. This also allows the building owner to shop the risk around and potentially get a better rate from a different insurer. While rates may keep rising, it is possible to mitigate some of that price hike. Proactively maintaining and inspecting a commercial building is one of the best ways to keep your insurance premium under control.
Source: Kato Roofing