Educating your clients on insurance price increase

Rising prices seem to be on everyone’s minds lately – from gas and groceries to rent, leisure and entertainment, almost everything is more expensive than it was in 2021.

Unfortunately, one of the more recent cost increases we’ve seen has been in the insurance industry, where rates have climbed by 11% in Q1 2022 alone. While this wasn’t completely unexpected – rates have been increasing steadily for years now – it’s a big jump and yet another reminder to agents of the difficult conversations they need to have with clients as part of their job.

In this article, we’ll delve into commercial insurance rate increases and provide some tips on how you can explain them to your clients.

What causes insurance costs to increase?

Pretty much all agents are familiar with the traditional factors affecting a client’s rates. Risk, vulnerability and claim history are all major determinants in how much someone ends up paying in premiums.

However, in addition to this, there are several external reasons for rates to change, many of which clients themselves can’t do anything about.


As we already alluded to, inflation is a major issue this year. Prices for pretty much everything has gone up, initiating a massive domino effect across the board. This includes the cost of labor, which has a direct impact on how much it costs to repair or replace property.

In other words, as the cost of goods and services increase, so does the amount that insurance companies must pay out in claims.

Internal Costs

In order to stay afloat, insurance companies need to make a profit. To do this, they charge their policyholders premiums that are high enough to cover their losses, expenses and make a profit. Of course, their own expenses can also increase – such as the cost of labor, regulatory fees, and new technology. And while you might think that insurance companies would just absorb these additional costs, they often pass them on to their policyholders in the form of higher premiums.

How to discuss price increases with your clients?

No agent wants to tell their clients that they should expect to pay more in insurance costs – most of the time it’s due to factors they’re not responsible for and can’t do anything about.

That being said, price increase conversations are an inevitable part of the job and need to be handled in a professional and careful way. The following are some tips to do just that.

Give plenty of notice

Surprises are never fun – especially when it comes to money. If possible, try to give your clients as much notice as you can that their rates are anticipated to go up. This will give them time to reassess their existing budget or explore alternative options.

Be upfront and honest

When it comes time to have the conversation, be upfront and honest about why rates are increasing. If it’s due to something out of your control – such as inflation – let them know. Most people are reasonable and will understand that you’re not responsible for the hikes.

Offer solutions

Price increases can be difficult to stomach – especially for small businesses who are already operating on tight margins. As their agent, it’s your job to try and find them the best possible coverage at the most reasonable rate.

There are a few ways you can do this, such as:

– Reviewing their policy to make sure they’re not overpaying for coverage they don’t need

– Exploring different carriers to see if there’s a better option

– Adjusting their deductibles or coverage limits

Contact clients directly

When it comes to any important changes to their lives, people always appreciate being directly contacted about them. This is especially true when it comes to insurance price increases. Contacting clients directly regarding rate changes speaks to a matter of decency and respect for their business. It conveys that you understand this is important to them, and that you’re not just trying to sweep it under the rug.

Be open for questions and follow-ups

Things like price changes are prone to unsettling people and stirring the pot in terms of questions and concerns. As such, it’s important to be open for questions and follow-ups after the initial conversation. If a client needs more information or clarification, make sure you’re readily available to provide it.

Price increases are never an easy thing to deal with – for either agents or their clients. However, by being upfront, honest and solution-oriented, you can make the best out of a difficult situation.

There’s a lot to think about when it comes to insurance price increase. Luckily, we’ve seen our fair share of them at Craig and Leicht. We’ve helped agents educate their clients through this process, and we’d be happy to help you gear up for next season. If you have any questions on what to expect or how to help your clients, don’t hesitate to reach out to us.


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