A Look at the General Liability Market for 2022 | Property & Casualty

A Look at the General Liability Market for 2022 | Property & Casualty

Recently, insurance carriers have seen a trend of the general liability market underperforming. A continual influx of severe claims has influenced insurance carriers to tighten underwriting standards, deploy less capacity and employ rate increases.

Despite these trends, carriers are optimistic as general liability results have shown signs of improvement. Policy holders should expect a modest rate increase for their for general liability coverage in 2022. Unfortunately, insureds with greater general liability exposures (e.g., real estate, construction, manufacturing, retail, hospitality) could experience double-digit rate increases and restrictive underwriting standards.

Developments & Trends to Watch

Social Inflation Concerns

Understanding social inflation and its direct effect on your insurance cost is imperative. A heightened frequency and severity of insurance claims has resulted from societal trends and views toward increased litigation, broader contract interpretations, plaintiff-friendly legal decisions and large jury awards. Social inflation directly relates to the effect rising litigation costs have on an insured’s claim payouts, loss ratios, how much policyholders will pay for their coverages and ultimately raises the cost of insurance. The primary social inflation factor influencing general liability coverage is nuclear verdicts, especially commercial auto accidents and class-action lawsuits. According to an American Trucking Research Institute’s (ATRI) recent database report of 600 cases (2006-2019), nuclear verdicts increased in quantity from 26 cases in the first five years to nearly 300 in the final five years. The number of nuclear verdicts over $10 million nearly doubled during that time, as well.

Surging Single-Fatality Expenses

The past decade has seen single-fatality losses become an increasingly predominant liability concern. They derive from various scenarios (e.g., on-site accidents, product defects, commercial auto crashes) that make organizations liable for the subsequent fatalities. Advisen loss data has discovered the median cost of a single-fatality loss spiked 67% between 2010 and 2020, soaring from $2.3 million to $3.7 million. While losses can be attributed to all industry lines, due to high-risk operations, the manufacturing and construction sectors contribute to over 35% of overall single-fatality losses. These losses are also credited to increased fatal incidents, social inflation and surging medical expenses. Generally, single-fatality events result in wrongful death lawsuits and can result in costly liability claims from awarded damages (e.g., medical costs, funeral expenses, lost wages).

Tips for Insurance Buyers

  • Partner with your insurance broker to stay educated about significant market changes that could affect your rates and loss control measures to lessen their impact on your policy
  • Establish a culture of safety and implement policies and procedures to reduce potential for customer or visitor injuries (e.g., maintaining safe walking surfaces, promoting proper housekeeping).
  • Review your general liability coverage early with your insurance broker to ensure limits match up with your insurance needs and your organization is prepared for changes in the market.

We’re Here to Help

While the hardening market is influencing the general liability market, experts are predicting a marginal 2.5 to 15% rate increase in 2022. Working with your insurance broker can help lessen the impact of these premium increases and create a plan to prevent a negative impact on your budget. If you have questions about your general liability policy or potential risk mitigation strategies, connect with a member of our team.

A Look at the General Liability Market for 2022 | Property & Casualtyhttps://www.cbiz.com/LinkClick.aspx?fileticket=sY6IflgTP4c%3d&portalid=0Recently, insurance carriers have seen a trend of the general liability market underperforming.2022-02-22T17:00:00-05:00Recently, insurance carriers have seen a trend of the general liability market underperforming.Risk MitigationProperty & Casualty InsuranceYes