The Hidden Costs of Switching Carriers at Renewal Time

July 18, 2022


It’s no secret, insurance costs are on the rise – across coverages. And current market trends reveal larger increases in the first quarter of 2022. More specifically, that’s a 19.7% increase for cyber insurance, 9.7% for umbrella and excess insurance, 10.3% increase for transportation and 8.7% increase for directors and officers liability insurance.[1] Experts predict overall rate increases of between 5% and 10% across policy type in 2022.

These rate increases are causing some businesses to second-guess their carrier commitments. They’re wondering if the grass is indeed greener. Would changing their insurance carrier reduce their rate? These are reasonable questions around renewal time, but many businesses are not factoring in the costs buried within the decision to switch.

8 considerations prior to switching insurance carriers

Changing insurance carriers, agents or brokers might seem like a quick fix for high premium rates, but it may end up costing your business more in the long run.

A lot goes into a policy based on which carrier a business chooses. Here are eight considerations you’ll want to consider before making the switch:

  1. It takes time to understand the nuances of a business. Relationships take years to develop. A new carrier isn’t going to immediately “get” your business. When your business needs and trajectory change, you don’t want to re-explain the nuances that a long-term partner would already understand. Your existing carrier, if they’re good, will be on the same wavelength as you, striving for the same goals.
  2. Business relationship disruptions can set companies back. Established partnerships work seamlessly because trust is built in. At the end of the day, business is conducted between people, and familiarity can only help the relationship. A different carrier may not have the ability to grow with you, as some carriers focus on smaller risks and will have to non-renew as your company becomes larger.
  3. There is a difference between admitted and non-admitted carriers. Admitted insurance companies are backed by the state if something goes wrong, must comply with local regulations and are verified. They are also required to notify insureds at least 60 days out if they are not renewing a policy, which gives companies time to find a replacement. Non-admitted carriers are not state-approved and thus don’t offer you the same protections.[2] For example, Insuretech companies are non-admitted carriers, which makes them a riskier bet.
  4. Carriers can change direction. Insurance companies, especially those with frequent leadership changes, may have unstable appetites. One day they may like your type of business, the next day they may decide to get out of it entirely and drop you. These changes are sometimes claims-driven, sometimes data-driven and sometimes just the preference of new leadership. You can’t control when this will happen, and yet you end up with a non-renew because of a change in carrier appetite.
  5. Not all carriers are experts in every space. An insurance company that understands the industry in which your business operates is key to a successful relationship. The commercial transportation industry is a great example; it’s constantly evolving, and there are nuances that only experts will know how to handle. Selecting a carrier with industry knowledge will be key to you getting the best prices, limits and removing important exclusions. Agents and brokers who know the industry have market relationships that others, who aren’t specialists, can’t access.
  6. A carrier’s claims track record can tell you a lot about how they operate. Things to ask when changing carriers: Do they pay claims out on time and consistently? Do the carrier’s claims align with its underwriting philosophy? Do they handle claims in-house? Ask for metrics on claims settlements. The more information you can obtain about how the carrier manages its claims, the better off your business will be should you have a claim.
  7. Additional services can be a big help. Ancillary benefits like loss control and training are not offered by every carrier — often because they don’t have the experience to provide them. But they can really help businesses operate better. Ask about this before making a switch.
  8. There may be exclusions on the new policy. Some terms, conditions and exclusions are often noted in fine print on a carrier’s policy. Businesses might overlook them when considering a change of carriers.

Renewal time is important, and IAT Insurance Group wants you to make the right decision for your business. Contact us to learn more.


[1] Business Insurance “Commercial prices continue to increase in Q1: MarketScout,” April 5, 2022.

[2] Insureon “Admitted vs. non-admitted insurance carriers,” Accessed April 30, 2022.