If there’s one common attribute I’m seeing with all of the financial statements that leave my office daily, it’s that insurance costs have gone through the roof. Whether its health, auto, or other casualty coverage, the increases are ridiculous.
For many, these expenses have jumped 15% to 20% in the last year alone.
The increases are having longer-term effects that many could never have foreseen. In speaking to many of my clients, those effects include…
Different Hiring Practices
Some are taking a harder look at potential hires. If they see someone with a bad driving record who would be making deliveries for them, many times they’ll pass on that hire. A couple of years ago they would have offered the job, but not now.
Others are having difficulties hiring entry level personnel who in this instance are asked to pay for half of their health insurance costs. Given the soaring costs involved, many new hires simply can’t afford it.
Cutting Payrolls
Some are simply cutting their payrolls to reduce their health insurance costs or not hiring in the first place. For many, it’s less expensive to give additional hours to their existing people, rather than to put an entire additional family on their health insurance plan.
A Harder Look At New Projects
I know of at least one instance where the higher insurance costs stopped a new project for going forward. If the potential profits on it are slim, and it includes lots of people and property acquisitions, then the insurance increases might put any profit projections in the red.
The problem with the skyrocketing costs of health insurance was predictable. As soon as those of us who pay for it were required to also pay for all of those who can’t afford it, what did anyone think the costs would do? Did anyone actually think that they’d go down?
Also, our policies now cover an infinite amount of coverage. If you were an insurance underwriter, how would you possibly be able to know what infinity will cost?
Billions of dollars are being set aside in insurance pools to cover their eventual expenses. Of course these costs are out of control.
Auto insurance has also seen steep increases. As cars become more expensive, and the technology they have does the same, the cost of repairing them isn’t decreasing.
Property insurance has done the same thing. The next time you’re at a hardware store, look at what a 2 X 4 currently costs versus what we used to pay for them. The cost of repairs as well as the additional natural disasters we’re seeing have pushed casualty rates sky high.
Let me leave you with this…
Spending the time to get your insurance quoted by multiple sources every year can really make a difference. It takes time that none of us have, but it can pay dividends.
What many don’t understand is that every different type of risk, may not be that individual insurer’s cup of tea.
If an insurance company has much more money coming in for auto insurance, than they have for apartment building coverage, then they will probably be much more competitive on the cars.
Why? Because they have a much larger pool that ultimately lessens their risk of financial problems on individual occurrences. As such, they can be more competitive than others offering the same coverage. The same is true of all other types of insurance.
Other than that, there isn’t any other good advice that I can give. The problems driving your skyrocketing insurance costs aren’t going to change anytime soon.
People who don’t do what we do, act like it’s easy. They think that our resources are unlimited, and that we can do whatever we want.
If you can adjust your prices, cut some other expenses, or save some money by shopping your insurance once a year, then we do what we do.
Other than that, as Entrepreneurs we soldier on.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.SalarySolutions.net
www.AccountingSolutionsLtd.com
Note that the only professional services provided by Accounting Solutions Ltd. are those specified in a written communication from our office detailing the scope of services to be rendered and the terms and conditions applicable to the engagement.