The State of Business Insurance 2023: Insights and Products

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Businesses face financial uncertainties due to inflation in 2023, even with their business insurance policies. All lines of commercial insurance saw increases in premiums towards the end of 2022, except for workers compensation, which is expected to rise in the coming months.

Considering the impact of inflation on other industries, property insurance has actually remained stable, except for commercial properties located in areas with a high wildfire score or in states prone to wind storms and floods. Natural disasters continue to be a financially taxing issue for businesses as storms become more and more severe.

As for losses due to crime, according to a Deloitte report, cyber attacks in the form of ransomware were up 235% in 2021 compared to 2019, and the average ransom payments skyrocketed 370%. These numbers only increased in 2022, a year that was full of cyber scams and other forms of organized retail crime. Insurance agencies across the country reported more sales of cyber insurance in the past year, some as much as 50% more, as a means of combating cyber attacks. Even LLCs are buying cyber protection from their insurance agents.

Let’s look at how much prices have risen across the board for the coverages you need for your business. We’ll review coverages you ought to have if you do not have them already. We’ll also look at recent disasters, how much they cost in property losses alone and how you should prepare for the next one to save your business thousands of dollars in losses in 2023 and beyond.

How Much Did Business Insurance Rates Rise in 2022?

Other industries were hit harder than insurance, but we did see rates rise, particularly due to severe weather and inflation. Here are some figures on how much commercial insurance rates have risen going into 2023:

Type of Business Insurance Coverage

Average Increase in Premiums End of 2022

Commercial Property Coverage


Business Owners Policy (BOP)


Commercial Auto


General Liability


Executive Risk (D&O and Crime Coverage)


Workers Compensation


Cyber Insurance


What’s the Best Way to Combat Rising Business Insurance Rates?

The only way to know who can offer you comparable coverage as you already have – or possibly a more comprehensive policy for the same price – is to compare rates. Calling each insurer and going through the application process is too time consuming. Plus, rates change daily so it’s like comparing apples to oranges. Find a vendor you trust, and compare rates once to see which agents in your area have what you’re looking for in a business policy.

Is the Commercial Insurance Your Business Needs Increasing?

Property Insurance

Due to inflation, repair and replacement of office equipment, furniture and even the building, if you own it, has gone up a considerable bit over the past year. Replacement value of most properties has increased significantly, but it may still save you thousands of dollars over getting a payout at actual cash value if the next disaster strikes.

Commercial property insurance has increased for businesses located in areas with a high wildfire score or in states prone to wind storms and floods.

General Liability Insurance

General liability coverage is experiencing modest increases. This is good news because general liability insurance will protect you against expensive lawsuits if guests or visitors are hurt when visiting your place of business. It’s the main component of a business policy.

Commercial Auto Insurance

Across the board, distracted driving has driven up auto insurance costs, and that include commercial auto insurance. The cost to fix a damaged auto has been affected by inflationary prices of labor and parts. Also, the cameras and sensors on newer cars cause everyone’s premiums to rise, even if your company car or fleet is five years old.

Workers Compensation

Rates are expected to increase, but this is one type of coverage you don’t want to go without. If one or more employees gets injured or falls ill due to their employment, this is the coverage that you’d need to stay whole.

Expect More Workers Compensation Claims

Unemployment is low, but people are jumping around from job to job. If you have high turnover at your business, at any level, expect to pay more in workers compensation claims. New workers are always more prone to injuries than experienced workers, and according to the 2022 Travelers Injury Impact Report, 38% of injuries happen during the first year of work. To prevent injuries before they happen, create a robust training program during onboarding. Also, work to reduce turnover, which is expensive for a business on several fronts!

Executive Risk

This type of protection includes directors and officers (D&O) liability, employment practices and crime coverages. Roughly 5% to 10% average rate increases are expected in the new year but you will want to protect executive-level employees.

Professional Liability

Some insurers are charging roughly 10% or more, but you’re looking at a 5% increase if you shop around. This is a good product to have if your organization runs the risk of being accused of negligence, misrepresentation and inaccurate advice.

Cyber Insurance

Rates for cyber insurance are increasing, and underwriting requirements are getting stricter. Costs will likely go up 25% to 100% or more. It is a good idea to shop around for the best rate but don’t turn your noses at this product if you have an e-commerce store or a robust website that can be hacked. Data breaches and ransomware are painful problems to have if you don’t have the proper insurance coverage.

Find the Commercial Insurance for Your Business

Why Cyber Liability Insurance Is Becoming Essential

Smaller Businesses Are Easy Prey

Many small business owners assume that cyber breaches and cyber scams only happen to the big guys, like Target or Walmart. While it’s true that those behemoth stores get the most news attention, it doesn’t mean that small businesses are not attacked every day, too, and especially around holidays.

It’s easy for hackers to create deceptively authentic-looking emails with bad links to scam your clientele or to intercept your checkout processes on your website, thereby stealing payment information and losing you a sale.

Success of a Cyber Endorsement Depends on You

You need to be proactive about securing your online processes, and that means training employees about cyber security and possibly hiring a cyber security officer to make sure your entire staff takes appropriate steps to stay safe.

What a consultant or officer will tell you is to 1-enable multi-factor authentication of passwords and 2-to beware of phishing emails and corrupt links. They will also help put an emergency plan in place, in case you are ever targeted.

Cyber attacks in the form of ransomware were up 235% in 2021 compared to 2019, and the average ransom payments skyrocketed 370%.

Buying a Cyber Endorsement

Buying cyber insurance doesn’t mean spending thousands of dollars a year. A simple endorsement can be added to a robust commercial policy at minimal cost and may even save you thousands of dollars if your or organization is attacked. Most endorsements run less than $300 a year, around $30 a month for peace of mind.

How Natural Disasters Are Affecting Business Insurance

In 2021, the U.S. also saw $92 billion in insured losses – including business losses the victims probably had to shoulder alone if they didn’t have commercial insurance.

In short, climate change is resulting in more frequent and more severe natural disasters. That, coupled with inflation, is driving the cost and demand for construction materials and skilled labor sky-high. Rebuilding a business after a  wildfire, hurricane, flood, or hailstorm is more expensive than ever.

After Hurricane Ian, for instance, business insurance – along with home and auto insurance – will be more expensive for Floridians. As the rest of the nation also grapples with more severe weather, we may all pay more for any type of property and casualty coverage.

States that have recently had heavy losses (and/or see losses annually) due to the following disasters will continue to see premiums rise:

  • Wind storms
  • Floods
  • Wildfires

Below are property losses resulting from hurricanes and wildfires. While the numbers also include homes, businesses and business equipment are included in the losses:



Property Losses


Hurricane Ian



Hurricane Ida



Hurricane Harvey


*World Vision 


Number of Wildfires

Property Losses



Not yet concluded







How Inflation Is Affecting Business Insurance

Inflation is now the highest it’s been in decades, and it affects insurance too, because business insurance is also dependent on the price of labor, operational costs and materials – all of which soared as 2022 came to a close. Like homeowners insurance and car insurance, labor, and materials/parts are necessary to rebuild your business if business property is destroyed in a fire or after a severe storm.

Recent increases in P&C rates have been mild, but you may expect premiums to rise in 2023.

Organized Retail Crime Causing Shrinkage

In 2021 and 2022, Organized Retail Crime (ORC) caused many losses, and not just to giants like Target and Walmart. Mom and pop shops were also burglarized. While products stolen off shelves are not covered by commercial insurance, stolen inventory from warehouses and storage may be reimbursed. If a shop needs to be shut down temporarily to  replace shattered cases and such, business interruption coverage would take care of losses in income.

Loss Prevention Tips for Businesses 2023

  • Install security cameras in case of theft
  • Install sprinkler systems in case of fire
  • Regularly maintain electrical systems, furnaces and water systems
  • Implement fire safety inspections
  • Create severe weather procedures
  • Create lock-up procedures
  • Write up escape plans for fire and response teams for medical emergencies
  • Clean floors and hallways to prevent slips and falls (by customers and employees)
  • Require contractor licenses and certifications for safety
  • Teach employees about ransomware so they do not fall for a scam
  • Utilize technology in the form of security tags if you’re a retailer
  • Train employees on how to respond to menacing organized retail crime bandits

Business Insurance FAQs

What types of coverage do all businesses need to have?

Most businesses need general liability insurance, professional liability insurance and workers' compensation insurance if they have employees. Some businessowners buy a business owners policy, which bundles the most common coverage.

Is business insurance required legally?

Yes, if you have employees, you must carry workers compensation. If you have a company car or fleet of company cars, they must have commercial auto insurance coverage. Other coverages may be optional but wise to add in case something goes wrong.

Is business insurance tax deductible?

As long as the coverage is for the purpose of operating a business, a business policy is tax deductible. If the coverage is for a self-insurance reserve fund or a loss of earning insurance policy, it is not tax deductible.

Key Takeaways

  • Expect a mild hike in business insurance premiums.
  • Expect cyber insurance to cost much more – maybe even double – what it cost a year prior.
  • Switch to a more robust commercial insurance plan for less and take loss prevention steps so you don’t have to file a claim.

Severe storms, inflation and crime are causing business insurance prices to soar, and commercial insurance premiums are only expected to rise in 2023. Shopping around for a good deal and buying more coverage for less is a wise thing for business owners to do. You don’t even have to spend time on the phone waiting for a quote. Just enter your zip code below, answer a few questions and an agent in your area will contact you with their offered price. The service is completely free!

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