Contact: Zachary West
Associate, Market Intelligence & Insights
MARKET CONDITIONS AND COVID-19 CONTINUED TO IMPACT ALL LINES OF BUSINESS IN Q4 2020, ACCORDING TO CIAB MARKET SURVEY
WASHINGTON, D.C. — February 17, 2021 — Premium prices continued to climb in Q4 2020, though at a slightly slower pace than in previous quarters, according to The Council of Insurance Agents & Brokers’ Q4 Commercial P/C Market Survey. Prices rose across all-sized accounts by an average of 10.7%, down slightly from 11.7% in Q3 2020. The most recent quarter was also the 13th consecutive with increased prices. As with previous quarters, large accounts were the most impacted by Q4 2020 market conditions, with a premium increase of 13.7%.
When looking at the data by line of business, Umbrella again recorded the highest premium increase by far, at 21.3%. The second and third highest increases were D&O, at 14.7%, and Commercial Property, at 12.9%. The average premium increase for Cyber broke double digits for the first time since the Market Index began tracking the line, coming in at 11.1%, something respondents attributed to the increased frequency and severity of ransomware attacks.
“The worst of the pandemic may have passed, but broker struggles continued into Q4 2020,” said Ken A. Crerar, President/CEO of The Council. “Umbrella and D&O liability posed continued challenges due to a reluctance from carriers to write those risks, and new trouble for cyber emerged following an uptick in costly ransomware attacks in 2020. Brokers should stand ready to help their clients understand and navigate these challenging market conditions and identify new and emerging risks.”
Capacity decreased for the most troubled lines, with 88% of respondents reporting a decrease in capacity for Umbrella, and 78% and 64% of respondents reporting the same for Commercial Property and D&O, respectively. Nearly 50% of respondents also said that there was a decrease in capacity for Cyber, suggesting that underwriters took notice of the recent rise in ransomware claims in 2020.
Respondents emphasized an increased administrative burden in Q4 2020, as carriers requested “far more” information than usual. “Underwriters were really drilling down more into what the companies do and how they operate,” said one respondent from a midsized Southeastern firm. “Managers were increasingly having to sign off on terms, conditions, and pricing. As a result, taking much longer to get renewals or options from carriers.”
In terms of respondent priorities, “enhancing customer experience” was considered crucial by many respondents, given how the virtual workplace will impact building and maintaining relationships. Respondents highlighted that they “needed to make sure we are in contact with our clients on a regular basis and make sure we are responding with value-added services that are of real value to them.”
COVID-19 also continued to impact employee health and wellness in Q4 2020, with “maintaining employee health and wellness” recorded as one of the top three challenges for brokers in Q4. “COVID-19 has impacted everyone differently and keeping employees positive and productive can be a challenge especially when everyone’s impact is different,” said one respondent from a large Midwestern firm.