Understanding And Managing Insurance Cycles to Protect Your Limo Business

 By Randy O’Neill

“Those who cannot remember the past are condemned to repeat it.”
George Santayana, The Life of Reason

“We have experienced four such cycles since 1985, with today’s highly competitive soft market by far the most prolonged.”

“We have experienced four such cycles since 1985, with today’s highly competitive soft market by far the most prolonged.”

Because a few of the limousine industry’s insurance specialty companies have been providing coverages for a few decades, they know where pricing should be. They are very familiar with the cyclical nature of the business, as well as the problems that hard and soft markets create. “We have experienced four such cycles since 1985, with today’s highly competitive soft market by far the most prolonged and potentially harmful to limousine operators in a quarter century.”

Iinsurance industry predicting a slow hardening of commercial insurance market

“Many insurance industry pundits are predicting a slow hardening of the overall commercial insurance market to begin later this year.”

In fact, we have experienced four such cycles since 1985, with today highly competitive soft market by far the most prolonged and potentially harmful to limousine operators in a quarter century. When the inevitable hard market hits, and it will, it can lead to insurance company bankruptcies, market withdrawals, and premium increases, leaving many operators scrambling for affordable coverage.

What Can a Limo Operator Do?
Thankfully, not all limousine operators wilt be negatively impacted by the impending market hardening. The most vulnerable are those who chose to “ride the cycle” by chasing the lowest price; those best positioned are operators who have established long-term relationships with an insurer that is committed to the continued financial health of the limousine operators it insures.

“The most vulnerable are I those who chose to [chase] the lowest price.”

Savvy operators know that, regardless of fleet size, they can reduce their annual insurance costs by up to 60 percent by prudently using deductibles on both their liability and physical damage coverages. With savings like that achievable, operators should review their historical losses and only transfer to any insurer what’s truly unpredictable. A pretty simple approach, but very effective regardless of market cycles.

Excerpted from SEPTEMBER 2011 LIMOUSINE DIGEST.