The Business Journal surveyed the North Bay’s largest insurance agencies for their outlook on policies for business in 2011. Presented alphabetically by company. Click here for photo gallery.

Edgewood Partners Insurance Center

Bill Merget, Principal

What do you see as the trends in business insurance in 2011?

North Bay business insurance buyers will benefit from a continued competitive marketplace as renewal rates on property and liability will largely remain flat. This is a continuation of a soft market that began in 2004. The anemic economic recovery will keep pressure on rates as insurers vie for pieces of a shrinking pie. Also fueling price competition is insurer company overcapitalization and worldwide natural catastrophes that have left United States insurers largely unscathed.

What issues are your clients asking about?

Astute buyers recognize that market premium pricing is at or very close to the bottom and are making buying decisions based on “cost” rather than simply “price.” In other words, local deliverables such as loss control, claims administration and information services reduce the total cost of risk and are significant broker value adds to simply placing and administering insurance policies.

George Petersen Insurance Agency

Josh Johnsen, Corp. Vice President

What do you see as the trends in business insurance in 2011?

Cost in the workers compensation area is rising as the cost for health care keeps increasing. The property and casualty side of insurance is starting to feel the effects of the economy with claims climbing not only in number of claims but amounts that the carriers are paying out. Add that to the decrease in exposure equals we are starting to see the market harden.

What issues are your clients asking about?

Cost containment. As we start to see the economy recover, our clients are still looking at ways to save money. We provide a variety of options to our clients to help contain their insurance costs by looking at alternative markets, risk transfer and quality of their insurance program.

Heffernan Insurance Brokers

Jon McGraw, Vice President

Elizabeth Bishop, Senior Vice President

What do you see as the trends in business insurance in 2011?

The trends in business insurance tell us that there is still quite a bit of capacity at the reinsurance level, which means that rates for most lines, except worker’s compensation most likely will remain flat. Worker’s compensation will trend at a 5 to 10 percent rate increase for most employers across most class codes. Some of that trending is an increase in employer’s experience modification (particularly in construction) if the employer experienced a sharp decrease in payroll.

What are the trends in employee benefits in cost and types of benefits?

The uncertainty and complexity of health care reform has overshadowed the continued double digit growth of medical insurance premiums. Employers are struggling to both pay for these increases and maintain reasonable benefits coverage in a very uncertain environment. Movement to more consumer directed type plans, HSAs and HRAs, has been one tactic as well as charging the employee more for medical and other benefits. Most carriers are discontinuing their richest plans while trying to move members toward higher deductibles. The medical providers are also fighting for private insurance patients because of a concern that when the MediCal coverage expansion hits they will need full pay patients to offset the below cost reimbursements from MediCal. Finally there will continue to be a push toward wellness programs as early adopters begin to document positive results.

What are the issues your clients are asking about?

Most of our clients are still quite concerned over price increases, as their revenues are flat or potentially still declining due to the economy. Larger employers are beginning to ask about wellness programs and wonder how they can potentially pay off in the future to reduce health benefits and/or worker’s compensation costs. There are payoffs for correct implementation of wellness programs, and employers want to know “how” they can work and what they need to do to implement them.

Sitzmann Morris & Lavis

Victor Mcknight

What do you see as the trends in business insurance in 2011?

On health insurance, many employers have raised co-pays and deductibles in past years and are uncomfortable going any higher so many are renewing on their existing plans and passing on the increases to the employees in form of higher contributions. Some are also reducing contributions to their Health Savings Accounts. Some employers have added a very low option plan while providing the option for employees to buy up to a better plan.

What issues are your clients asking about?

Clients are asking a lot of questions on how health care reform will impact them and what they need to do to stay in compliance. They are very concerned about cost containment and are asking what they can do to reduce costs. Some are rolling out wellness solutions in hopes that it will pay off in the future if not with reduced premiums then with higher productivity.

Is there something you want to add?

Employers will need to stay educated on health care reform and how it impacts their business. The federal government is providing guidance on a regular basis that will change the way we implement the law. It is vital that they know how the decisions they make today will impact them in the future.

Vantreo Insurance Brokerage

Pamela Chanter , Vice President

What do you see as the trends in business insurance in 2011?

Business owners are continuing to look for competitive pricing, but also looking for value-added services and seeking more advice. Changing sales, payroll, and in some cases a restructuring of the core business services or products has necessitated changes in their insurance exposure and thus coverage and limits. We provide an outsourced risk manager approach to providing a full range of insurance and risk solutions for businesses. This includes a proven system to reduce workers compensation costs.

What issues are your clients asking about?

Clients are asking about the national health care reform; how it will affect them, what their options are, and how this will impact their bottom line. They want to know if Health Savings Accounts are still a good value (not necessarily so), what voluntary benefits can be offered to the total benefits package without cost to the employer, and questions about wellness programs. They also ask about available pharmacy discount programs. Our benefits department stays on top of the changes and closely communicates options and updates with our clients.

Clients also ask questions about how to create a culture that is sustainable through the good times, but also the difficult economic times. We provide answers that go beyond the insurance policy and affect their corporate culture. We provide dynamic workshops and supervisor trainings to inspire people to work more effectively, as well as partner with other trusted advisors to provide true solutions.

Wells Fargo Insurance Services USA

Mark Stokes, Regional Managing Director

What do you see as the trends in business insurance in 2011?

We expect 2011 to remain somewhat soft with decreases less than 2010. We also think we will see increases in the workers’ compensation line. Those increases will be driven primarily by the insured's past claims experience.

General liability: Rate levels continue to fall and we believe will continue to decrease in 2011. The rate reduction in 2011 may be smaller than 2010.

Workers’ compensation: Rate levels in 2010 have shown slight decreases throughout the year. We have seen some increases fourth quarter. We believe rate decreases and increases will vary by account in 2011. This is the line of coverage to watch closely during 2011.

Property: Property is very similar to general liability and the market remained soft throughout 2010 and will continue through 2011. We do expect the decreases to be smaller in 2011.

What are the trends in employee benefits in cost and types of benefits?

Unfortunately, despite the anemic economic environment we continue to experience, costs for employee medical benefits continue to increase annually at a double-digit pace. Employers are simply not able to afford these types of increases, and as a result they are looking at plan design changes to reduce costs, are passing on more costs to employees in the form of monthly premium contributions, and are considering high-deductible programs such as health savings accounts

Adding to all of these challenges, the recently-enacted health care reform legislation has increased the complexity of benefit administration, and has the potential to increase employer's costs. Our experience is that health care reform has added between 1 and 3 percent to most medical renewals, in addition to normal increases. In an effort to help companies manage these costs, we are working with our clients to develop wellness programs that encourage healthier lifestyles, increase employee productivity, and reduce health care costs over the longer term.

What issues are your clients asking about?

Our clients are asking about benchmarking to compare themselves with other companies in their industry. Many are also asking for health care plan design changes and wellness programs to help alleviate the cost of health care.

Woodruff-Sawyer & Co.

Tom Hughes and Chris Reiter

What do you see as the trends in business insurance in 2011?

Trends relating to business insurance, from an availability as well as premium level point of view remain steady. There continues to be competition between insurance carriers to retain their existing accounts as well as securing new. This works to the benefit of the commercial insurance buyer with continued attractive rate levels. This being said, there is a renewed focus on basic underwriting principles. Those businesses with effective loss control/ safety programs along with positive claims histories will benefit with attractive premium levels where those companies without will see premium increases. In certain instances, depending on loss experience, premium increases can be significant.

There are many reasons to produce a quality product and to work safely, but to control insurance costs, it is imperative that companies invest the necessary time and effort in to their overall risk management program.

What are the trends in employee benefits in cost and types of benefits?

Annual healthcare trend in Northern California is up slightly from years past because of the health care reform provisions that took effect in September 2010. It has settled in around 11 to 14 percent after adding in the additional 1 to 2 percent from the Patient Protection and Affordable Care Act. That has translated into annual premium cost increases that range from 9 to 18 percent. It obviously varies by insurance carrier and the plan design, but most companies in the North Bay that are a part of a pooled arrangement can expect that increase for traditional PPOs & HMOS. Consumer driven health plans or high deductible health plans that are often paired with a tax advantaged account are experiencing much more volatility and we have seen increases as high as 55 percent.

There have not been any significant new developments relative to the types or structure of benefits being offered. However, we are seeing continued interest and movement toward the aforementioned consumer driven and high deductable plans.

Employers are rediscovering self-funding or retaining more of the risk while lowering their premiums. Cost shifting in the form of reducing or eliminating certain benefits and/or requiring employees to pay a greater share of premiums is prevalent. Lastly, health care reform and the unabated annual double digit premium increases are causing many employers to question their place in the health care delivery system.

As we move closer to 2014, I think you will see a lot of companies scale back or completely get out of the business of providing employee benefits insurance. A more consumer oriented structure will emerge with the introduction of state health insurance exchanges and some employers will choose to pay the penalties, rather than provide the coverage themselves.

With that said, the new Republican controlled congress could change all that. One thing is certain, it will continue to be an issue and changes to current bill will likely be made.

What issues are your clients asking about?

From business insurance (property, liability, auto, etc.) to employee benefits, insureds are focused and are questioning the overall design of their insurance programs. This overall design approach includes cost versus benefit questions in every aspect. What are our risks, how do we handle? Do we transfer the risk to an insurance company for a premium, do we self insure to an extent?  Can we live without certain coverage?  Whereas in past years appropriate insurance products were purchased routinely, now every component is questioned. Those insured’s continuing to remain profitable are looking at every aspect of their business, not just insurance costs. The overall design must be cost effective.

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