My Federated Insurance Costs Went Up. What Should I Do?

Seeing your Federated Insurance rates increase is infuriating and headache-inducing. You’re likely frustrated dealing with your rates shooting up while feeling there isn’t a solution to what you’re dealing with. To no one’s surprise, one of the companies many of these businesses notice their rates increase is through Federated Insurance.

You’re not alone. ReNu Insurance Group has experience with companies dealing with increases in renewal premiums, especially with some of our 130+ captive clients previously working with Federated Insurance.  

This article will explain why your Federated Insurance rates are skyrocketing and offer solutions so you’re not paying higher premiums. It will help you determine how to best insure your business without worrying about increasing renewal premiums. 

Table of Contents:

• Why are my Federated Insurance rates increasing?
• How do I decrease my insurance premium cost?
  • Try raising your deductible to decrease your premium
  • Look at other insurance carriers
  • Consider captive insurance ownership

• There are better alternatives for your business. Don’t wait for your Federated Insurance rates to increase again.

Why are my Federated Insurance rates increasing?

Nothing is worse than getting that piece of paper in the mail or email that says, “Hey, we know you’ve been good at managing your risk and keeping claims to a bare minimum, but we’re going to increase your premium.”

(We wish it were that polite.)

Let's go to the basics: when you pay an insurance company, they take your premium payment and call it revenue. We don't need to remind you that a for-profit company with shareholders will never reduce its revenue just to give you a better deal.  

Another issue is all insurance companies suffer from class underwriting. If your particular class of business (auto dealer, contractor, etc.) has claims, you can bet that you will see premium increases even though you didn't file any claims.

And this isn’t based on the location of your business. For example, whether you are an auto dealer in Orlando or San Francisco, the entire auto dealer class will see rising premiums because of wildfires affecting dealerships in California. You’re punished for something that didn’t happen to you. You’re paying for the losers.

So the chances are Federated Insurance saw the class of business you’re part of and increased your rates to compensate for their losses within that industry. Essentially, you are paying for the losses other companies in your industry have had.

How do I decrease my insurance premium costs?

You’ll want to look at alternatives, especially when you’re seeing your rates increase no matter what actions you take.

Try raising your deductible to decrease your premium

Increasing your deductible is an alternative to consider if your business can manage its risk to minimize your insurance claims. What’s the issue with this method? You’re sort of gambling on your risk. 

The more claims you receive, the more you’ll be paying in deductibles. And if the market says your industry is a risk, you’ll likely still see an increase in your premium regardless of how well you perform. 

Look at other insurance carriers

There are many other carriers you can look at so your business doesn’t suffer from the higher rates Federated is giving you. And other carriers could provide you with better bang for your buck. 

The only issue with this solution is you’ll still face the same problem when going with an insurance carrier that makes decisions based on the market. While the rate is still better than the one you have with Federated, you can still get hit with surprise increases in your premiums.

Consider captive insurance ownership

If you haven't heard of captive insurance companies, here's a video that goes over what they are and how they work:

Let’s clarify one thing: captives aren’t for everyone. They’re fantastic for businesses that invest in their safety and risk management programs.

Captive insurance is a form of self-insurance (but not really). Captives make it so you own more of your risk, but you can also reap the rewards. You avoid relying on the market and design coverage that meets your specific requirements. So, your costs are always transparent without the hassle of being surprised by increased premiums in a market you have little to no control over.

And when a captive performs well, the profit stays with the owner instead of the insurance company.

Now, the bad news. Suppose you don’t prioritize work safety and risk management. In that case, you’ll either have frequent or catastrophic claims, which will cost you more than the traditional insurance premium. 

There are better alternatives for your business. Don’t wait for your Federated Insurance rates to increase again.

Whether you stay with traditional insurers or look at captives, you must learn more about the various alternatives and determine what’s best for your business. 

You need to read more about the differences between captive policies and traditional policies. And if you’re seriously considering captives as a viable alternative, you must learn about the pros and cons they offer. 

And when you’re still at an impasse, never be afraid to talk to an actual live human at ReNu Insurance Group. Figuring out how to best insure your business shouldn’t be a headache, especially when companies like Federated Insurance increase your rates.