Explaining Renewal Premium Increases to Clients

Separate exposure growth from rate change, and use the numbers to have a clearer renewal conversation.

Two reasons premiums rise

A renewal increase comes from one or both of two places: the business got bigger (more sales, payroll, vehicles or property value), or the price per unit of exposure went up.

Do the split

Compare premium per unit of exposure for the expiring and renewal terms. If premium rose 16% while sales rose 9%, the pure rate increase is about 7%. Exposure-driven increases simply reflect growth; rate-driven ones are about the market or the account’s losses.

Explain the rate piece

Rate changes come from the carrier’s overall results (combined ratio), loss trends in the line, reinsurance costs and the account’s own loss history. Bring the loss run to the conversation.

Options to offer

Higher deductibles, marketing to other carriers, risk-management improvements that support schedule credits, or adjusting limits. Show each option’s cost in numbers.

Calculators for this topic