Looking Ahead: Insurance Market Insights for 2022

The insurance industry has experienced a hard-market cycle over the last several years. Some business lines more so than others are seeing diminished capacity, tighter underwriting scrutiny and changing risk appetites and policy terms and conditions from insurers. Commercial Property, Commercial Auto Liability, Directors & Officers Liability (D&O), Cyber Liability and Excess Liability insurance lines have been in the forefront of hard-market rates.  Looking ahead, here are some insights on what to expect for the insurance market in 2022.

Market Will Remain Firm  

Third-quarter Property/Casualty (P&C) insurance reports indicate a continuation of the firm market with some key changes. This includes the deceleration in the rate of premium increases. Rate increases aren’t as steep as they once were. Most in the industry predict market moderation in most business lines, particularly as more capacity enters the market. Non-high-hazard risks and non-challenged occupancies particularly will see more moderate increases.  

Make no mistake, however, premiums continue to increase as evidenced by the Q3 P&C report released by the Council of Insurance Agents & Brokers (CIAB). Survey respondents reported an average premium increase of 8.9% across all account sizes. In addition, prices increased for all lines of business except for Workers’ Compensation insurance.  

Cyber Liability Premiums Continue to Rise 

Two notable areas where premiums have spiked significantly are Cyber Liability and Fiduciary Liability insurance. The Cyber Liability insurance space has experienced the largest increase with CIAB survey respondents seeing a 27% hike in pricing. A Willis Towers Watson report predicts pricing changes in 2022 in the Cyber Liability space between 50% and 150%. The reason for the spike is simple: Industries are finding themselves the targets of increasingly sophisticated attacks by cybercriminals. Insurers are not only raising rates as a result of the frequency and severity of ransomware attacks. They are also applying coinsurance and sub-limits and requiring clients to show proof of robust cybersecurity controls.  

Fiduciary Liability is another area where insurers have paid out large sums in losses. As a result, some carriers have left the space while others have imposed significant premium rates and higher retention levels. According to the Willis Towers Watson report, excess fee litigation for pension and retirement plans has been the primary cause of losses. While litigation has slowed down since 2020 when lawsuits were at an all-time high, insurers continue to worry about the volume of potential losses, the high cost of defense and the substantial number of pending cases. Rate predictions for 2022 are based on a plan’s assets, with premium increases ranging from 15% to 60%. Insurers are looking closely at retentions and first-dollar coverage is virtually impossible to obtain.  

The State of the Excess Liability Market 

The Umbrella/Excess Liability insurance market is stabilizing with new carrier entrants and capacity. Basically, you now have a two-tiered market. High-hazard risks will see greater increases (15% to 30%) than low-to-moderate hazard risks (flat to 15%). The reasons behind the rate hikes continue to be social inflation, nuclear verdicts with catastrophic losses, and anti-corporate sentiment among jurors. The best pricing and coverage in the Excess market is delivered by incumbent carriers that employ robust underwriting and risk analysis.  

Directors & Officers Liability Sees Additional Capacity 

D&O insurance in Q3, according to the CIAB, saw notable premium hikes at an average of 13.6%. However, additional excess capacity has helped to decelerate increases. Favorable risks fare much better than their challenged counterparts. Underwriting focus continues to be on a company’s financial strength; industry; claims history; COVID-19 resilience; and environmental, social and governance (ESG) policies. 

The Road Ahead for Commercial Auto Insurance 

Upward rate pressure for Commercial Auto insurance continues. In 2020 carriers posted their best underwriting result in a decade due to the sharp drop in driving during the height of the pandemic. However, with a return to normal traffic levels, we have seen motor vehicle accident-related deaths rise in 2021. More vehicles on the road, distracted driving, rising medical costs, truck driver shortages and a litigation environment with massive verdicts all contribute to a challenging Commercial Auto market moving forward.  

Inside Commercial Property  

Rates for Commercial Property insurance are firm but at a decelerated rate for non-challenged occupancies. Carriers continue to scrutinize tornado, hail, winter storms and wildfire exposures. They are also beginning to employ models for these perils and charging premiums to cover expected losses, according to the Willis Towers Watson report.  

As we head into 2022, it’s important for insurance agents and brokers to submit detailed applications and get ahead of their renewals to facilitate the underwriting process and procurement of coverage. Distinguished Programs looks forward to continuing to provide you with coverage solutions for your clients in the niche markets we serve.  

Sources:  CIAB, Willis Towers Watson 

About Distinguished Programs

Distinguished Programs is a leading national insurance Program Manager providing specialized insurance programs to brokers and agents with specific expertise in Real Estate, Community Associations, Hotels, and Restaurants. Property and liability products are distributed through a national network of agents and brokers. Serving the same core markets and partnering with the most stable and reputable carriers, Distinguished Programs’ high-limit umbrella programs remain the clear choice in its areas of specialty for superior coverage, competitive pricing, and attentive service. Through thoughtful innovation, stemming back to 1995, Distinguished Programs fosters growth and opportunities for its brokers, carriers, and employees.

View a full list of our programs and submit business with Distinguished.

‣ Register Your Agency
‣ Learn More
‣ Contact Us

New call-to-action