Research into business attitudes among small and medium sized enterprises (SMEs) suggests that the majority would prefer a tied in premium rate to fluctuating rates.
The research, carried out by Norwich Union (NU), said 69% of SMEs would opt for a tied in fixed premium rate that remained the same throughout the negotiated period.
NU said 11% were interested in the rollercoaster option, paying steep increases some years in return for reductions in others. But 62% said they would rather insurance premiums increased by a modest amount year on year.
While most SMEs (84%) claim to understand the reason why their premiums change year on year, nearly half (46%) believe insurers increase premiums to keep up with inflation, while a third believe premiums rise simply so insurers can make more profit.
Less than one in 10 were under the impression that brokers were to blame, taking more of a cut.
More than a third of SMEs think that up to 40% of the total cost of a premium goes straight to the insurer's bottom line, while 15% believe that as much as 60% will be profit. And nearly 5% think more than 80% of a premium goes straight to profit.
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