Market Conditions Eased Slightly
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.
Pricing increased 6.6% compared to 8.7% in the fourth quarter of 2021. Medium-sized accounts saw the largest average increase in premium pricing at 7.3%, compared to a 6.4% average for small accounts and 6.2% for large accounts.
Premiums increased an average of 5.7% across the five major commercial lines (i.e., commercial property, commercial auto, umbrella, general liability and workers’ compensation) The highest average increase came from umbrella lines at 10.5%, while workers’ compensation showed a slight decrease of 0.5% on average.
Cyber Coverage
Increases for cyber pricing slowed but remained well in double-digit territory. First-quarter average increases of cyber premiums were 27.5% versus 34.3% in the prior quarter. Carriers also began to enforced stricter underwriting requirements, including mandating cybersecurity protocols such as multifactor authentication, often outright denying insureds with insufficient or no loss controls.
One of the drivers for the continued price increases is the increasing frequency and severity of cyber claims.
Commercial Property Coverage
Premium prices for commercial property rose an average of 8.6%, the third highest of all lines after cyber and umbrella. Price hikes slowed from an average of 9.9% the prior quarter.
The increased premiums was primarily based on the upward pressure on property valuations and compounded by the recent upward trend in inflation. While property values rose in the last year, existing commercial property valuations and the policies rating based on those valuations do not reflect the increase in property value. Naturally, there was a need to update valuations to reflect the increased value of the property to ensure policyholder risks were properly insured.
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