There’s nothing more frustrating than seeing your client go a full year with low or no claims only to get slapped with a premium increase at renewal. It feels like they’re being punished for doing everything right.
As their agent, you’re the one who has to explain it. You’re the one your client goes to when they have little to no idea what’s going on.
At Captive Coalition, we work with independent agents to help them understand why premiums rise and what other strategies—inside and outside the traditional market—can help their clients gain control over their insurance spending.
In this article, you’ll get a clear look at what influences those renewal hikes, how to help your clients respond, and when it might be time to explore alternative insurance models.
Why Premiums Go Up—Even When Your Client Has No Claims
Premium increases often feel unfair to your client—especially if they’ve done the work to improve safety or reduce incidents. But the reality is, premium hikes are usually driven by broader market forces outside their control.
Here are three of the biggest reasons:
1. Insurance Carriers Need to Stay Profitable
Even if your client hasn’t filed a claim, carriers price risk based on the performance of the entire class of business. If other companies in your client’s industry are generating large losses, your client may still see rate increases—guilt by association.
Remember: Your client’s premium is the carrier’s revenue. If their line of business is costing the insurer money, they’re going to charge more across the board to cover it.
2. Rising Legal Judgments and Insurance Payouts
We’re living in the era of “nuclear verdicts.” Juries are awarding massive sums—millions, sometimes tens of millions—for claims that, just a few years ago, would’ve settled quietly. These judgments don’t just affect the businesses directly involved—they affect every policyholder in the carrier’s portfolio.
Your client may have zero claims. But if other insureds are getting hit with verdicts, the insurer is adjusting rates across the board to stay profitable.
These payouts often hit the umbrella layer, which is supposed to be reserved for catastrophic losses. When umbrella carriers start paying out routinely, they raise prices fast and hard. That cost trickles down to your client, even if their policies never breach primary limits.
And it’s not just the verdicts. It’s the cost of defending them.
- Lawyers charge more.
- Legal timelines stretch out.
- Defense strategies get more complex.
All of this is funded by insurance dollars. AKA your client’s dollars.
So even if they’re not in court, they’re paying the price. As their agent, helping them understand this context is critical when renewal season rolls around with a number they didn’t expect.
3. Auto Liability Claims Are Skyrocketing
Distracted driving is now more dangerous than drunk driving. And it’s everywhere. Commercial fleets and employee drivers are racking up more accidents, more injuries, and bigger claims. There’s also a correlation between using a cell phone while driving increases the likelihood of a crash.
The data is clear:
- More accidents
- More injuries
- More fatalities
- Bigger payouts
If your client has vehicles on the road, they’re feeling the effect, even if their own loss history is clean. Frequency is up. Severity is up. Because of those, premiums are up.
Helping Your Client Keep Premiums Down in the Traditional Market
You can’t control the insurance industry. But you can help your clients take smarter steps within it. If they’re not ready for alternative models like captives, here are four traditional strategies worth exploring:
1. Strengthen Risk Management
The most effective way to reduce long-term costs is to improve safety. Help your clients:
- Update employee training
- Implement return-to-work programs
- Analyze loss runs and fix problem areas
- Improve fleet safety and driver behavior
Even one less claim can make a difference at renewal. And insurers notice when a business is proactive about risk.
2. Consider Higher Deductible Plans
If your client has strong cash flow and low losses, a higher deductible plan might be a win. They’ll take on more risk, but in exchange, they often get a lower premium.
Just make sure they understand how these plans work:
- Claims still go through the carrier
- The carrier pays out, then bills the deductible
- The deductible impacts cash flow during claim years
It’s not for everyone, but for well-managed businesses, it can be a strategic lever.
3. Look Into Self-Insured Retention (SIR)
SIR structures are similar to deductibles but shift more responsibility onto the insured.
- The client pays claims directly up to a certain limit
- The carrier steps in only after the SIR threshold is met
- Premiums are usually lower since the carrier has less exposure
This is a more aggressive cost-control tool, and it works best for clients with a strong handle on risk and internal claims management.
4. Explore Retrospective Rating Plans
These plans adjust premiums based on actual losses during the policy period. It’s a way to align cost with performance.
- Lower losses = lower final premium
- Higher losses = the client pays more
These work best for clients who are confident in their safety programs and want skin in the game. It rewards what captives also reward: better-than-average performance.
When Traditional Strategies Aren’t Enough…
You might want to look beyond the Market.
You’ve explained the increases. You’ve implemented better risk management. You’ve explored high deductibles, SIRs, and retrospective plans.
But if your client is still frustrated with rising premiums and a lack of control, it might be time to help them look beyond the traditional market.
Captive insurance isn’t for every client. However, for the right one, it offers stability, transparency, and long-term cost savings the traditional market simply can’t match.
If you’re ready to learn more, read our Captive Insurance 101 Guide for Independent Agents to see how you can help your clients and strengthen your book in the process.
Want to learn more about captives from experts? Become a member of Captive Coalition for FREE to access additional resources, tools, webinars, and training to better help your clients and maintain your book of business.
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