According to The Council of Insurance Agents & Brokers’ (CIAB) latest quarterly survey, the second quarter marked the 19th consecutive quarter of commercial price increases, with brokers reporting continued market easing and average price increases of 6.1% across all lines of business.
“Signs of pricing moderation emerged for some lines of business, such as flood, medical malpractice, and surety bonds,” stated CIAB in its report, “while others, such as cyber and umbrella, continued to experience upward pressure on premiums, though not as pronounced as in previous quarters.” Brokers reported little change from the first quarter, when prices rose an average of 5.7%.
Cyber pricing increased by 26.8% in Q2 2022, compared to 27.5% in Q1 and 34.3% in Q4 2021, continuing to lead all lines. According to the survey, pricing conditions for the line “continued to pose problems” for brokers, and it was deemed “a full-fledged hard market.”
“The theme of ‘not much change from Q1 2022’ came up again here,” CIAB observed. “However, all that meant was a continued rise in prices, stricter underwriting, and more trouble with ransomware claims.”
According to CIAB, the average increase in umbrella liability prices was 11.3%, followed by 8.3% for property, 7.9% for directors and officers (D&O), and 7.2% for commercial auto.
According to respondents, inflationary pressures took their toll on the market, particularly in commercial real estate and commercial auto. As insurers adjusted for rising property values and higher prices for building materials and auto parts, premiums rose. According to the report, administrative costs for filing claims have also increased.
The property market struggled with capacity constraints caused by natural disasters. Brokers struggled to place business in disaster-prone areas, particularly wildfire areas. They also noticed increased deductibles for coastal risks.
“Most carriers raised named storm deductibles with no rate relief,” said one broker, adding that “hurricane season had a far greater impact [than inflation].”
For commercial auto, the “staggering” 44 consecutive quarters of premium increases continued, with brokers concerned about the impact of inflation on coverage.
According to one Northeast broker, “availability of auto parts, new and used cars, and limited rental coverage made insureds concerned about the availability of coverage to make them whole after a loss.”
For brokers, the challenging economy and market deepened their role as clients’ “trusted advisor.”
According to one broker from a Northeast firm, “this market has caused many policies to have several limitations and exclusions that allow the commercial broker to prove their value” through “detailed analysis of all insurance options.”