The Council for Insurance Agents and Brokers’ (CIAB) recently released Q1 P/C Markey Survey 2021 indicated across-the-board rate upsurges for the fourth quarter in a row. Umbrella and cyber liability commercial lines experienced the greatest premium increases, while commercial property, business interruption and commercial auto remained somewhat stagnant. The market is continuing through a hardening period with the uncertainty of the pandemic still impacting pricing, coverage availability, renewals and underwriting trends. Directors & officers, commercial property and employment practices liability were the other three lines of business that reported average premium increases in excess of 10% at 15.1%, 12% and 10.8% respectively. To assist you through the market challenges, we have compiled a trending review of commercial lines that are experiencing the most substantial increases.
Commercial Lines Experiencing the Most Significant Increases
Excess & Umbrella
Once again, umbrella insurance premiums incurred a noteworthy increase for the first quarter with an average of 19.7%. Carriers continue to adjust their underwriting capacities and tighten standards. Insurance claim increases are reflecting the frequency and severity of nuclear verdicts and social inflation. Turbulence for excess/umbrella coverages are influencing many carriers to reduce their umbrella capacity. Concerns of increased litigation and perceived elevated risk exposure are driving these premiums. The most noteworthy claims have been attributed to commercial auto and general liability lines. Significant verdicts and a decade of auto losses have carriers justifying increases for a need to decrease capacity. Review more influences on the umbrella/excess commercial market.
Cyber liability saw an escalation of an average 18% in the first quarter of 2021. Some renewals are experiencing 80%+ in premium increases. Cyber liability’s large influence came quickly in Q1 from an increase in frequency and severity of cyber claims. Ransomware is attributed as the primary factor for a rise in these claims.
Experiencing a large influence from remote work, changes and advancements in workplace technology utilization placed a significant strain on the need for continued protection. As digital capabilities evolve, unfortunately so do cybersecurity threats. Impacts from ransomware attacks and payments such as the Colonial Pipeline incident will heavily influence the line’s trends for the remainder of 2021.
Tips for Insurance Buyers
- Anticipate and prepare for price increases and difficult renewals. In many cases, applications will have to be submitted earlier than normal.
- Work with your insurance broker to submit a quality application. Because of the firming market conditions for excess and umbrella layers, submission activity is up. Insurance companies are dealing with a lot of submissions for both renewals and new business. In this environment, poor applications are likely to be denied by underwriters.
- Several emerging cybersecurity concerns will influence coverage and the market. A continuation of remote work for many organizations could exploit vulnerabilities including cloud hijacking and ransomware threats. Businesses must remain up to date on the latest technology trends and adjust cyber risk management strategies accordingly.
If you need additional risk and insurance solutions to help offset these double-digit increases, please contact a member of our team.