The Council's Q1 2022 P/C Market Survey showed continued broad premium increases across commercial lines, with cyber insurance hitting new highs while commercial property and excess/umbrella remained firm. The hard market cycle that began in 2019 showed few signs of abating, particularly in lines with elevated claims activity. The quarterly results served as key benchmarks for brokers managing difficult client renewals.
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Media Contact: Nicole Vasile
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Survey Contact: Zachary West
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PRICE INCREASES MODERATED SLIGHTLY AT THE BEGINNING OF 2022, ACCORDING TO THE COUNCIL’S MARKET SURVEY
WASHINGTON, D.C. – May 25, 2022 – Premiums continued to increase in the first quarter of 2022, according to results from The Council of Insurance Agents & Brokers’ Commercial Property/Casualty Market Index, marking the 18th consecutive quarter of premium increases. However, there were signs that market conditions may have eased slightly this quarter. For example, the average increase in premiums across all account sizes was 6.6%, compared to 8.7% in Q4 2021.
A similar picture emerges when considering lines of business. Premiums increased by an average of 5.7% across the five major lines (commercial property, commercial auto, umbrella, general liability, workers compensation), down from 8.1% in Q4 2021. Most lines recorded increases 2% lower than in Q4 2021, with workers compensation even showing an average decrease in premiums, at -0.5%.
Despite the price moderation across the board, cyber remained an issue for brokers. Premium prices for that line increased by an average of 27.5%, compared to 34.3% in Q4 2021. According to respondents, some of the primary drivers for the continued price increases were the increasing frequency and severity of cyber claims. Tension caused by a combination of between reduced carrier appetite for the risk and high demand was also a key driver. The high demand for cyber coverage is, in part, fueled by greater awareness among policyholders of the threat cyber risk poses for businesses of all sizes. In addition to price increases, underwriters attempted to mitigate the losses from cyber claims with much stricter underwriting requirements, including making cybersecurity protocols like multifactor authentication mandatory.
Commercial property was also a focus this quarter, with respondents highlighting issues caused by the rise in property value in the past year due to lower capitalization rates, and high demand for commercial property such as apartment buildings, life-science labs, and warehouses for e-commerce distribution—issues compounded by the recent upward trend in inflation. Naturally, there was a need to update valuations to reflect the increased value of the property to ensure policyholder risks were properly insured. Brokers pointed out those corrections often meant increased premiums, as higher valuations meant higher total insurable value, which meant more exposure for carriers.
Among top priorities and challenges, “enhancing customer experience” emerged in the top three. Using technology to improve customer service, data collection, and data sharing was a common theme in addressing this challenge. Respondents also highlighted the need to become more data-driven, acknowledging the tight link between making good use of data and improving the customer experience.
