Deductibles In Industrial Fire Insurance

In recent times, the subject of deductibles in Industrial Fire insurance has gained significance to an increasing extent. In fact, up to a short time ago it was by no means common to apply deductibles in Industrial Fire insurance in Europe. The situation is entirely different in the USA where deductibles are the usual thing and are even obligatory with individual risk categories (e.g. petroleum refineries), hazards (e.g. explosion), or special types of companies (e.g. factory mutuals).Today, however, there is a definite increase in the demand for deductibles in Industrial Fire insurance in Europe, too.This trend may be explained by the fact that in order to reorganize their business successfully, insurers have been forced to increase their premiums by a considerable amount. It seems to be an unwritten law that when premiums in general are increased considerably, the point will some time or other be reached when the insured do not accept any further premium increases. Thus, even if such increases are completely justified in a view of claims experience, the insured will demand that premiums are reduced either by the insurer granting rebates for appropriate loss prevention measures or by the introduction of deductibles. In the USA, for example, such a situation arose around 1960 when considerable premium increases very quickly led to the introduction of substantial deductibles in Industrial business. In some European countries we are currently experiencing a similar development.