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.
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.