What are the emerging insurance trends in the commercial property and casualty market and how can you prepare? We have the answers for you, based on the 2021 Q1 Commercial Property/Casualty Market Index Report. For many, the results won’t be surprising—but there are things business owners can do to prepare in advance of renewal season. First, a quick overview of the current market.
Coming out of a solid year of shutdowns and other business disruptions, premium prices continue to trend upward. Premiums rose across all account sizes at an average of 10%, with large accounts absorbing the largest increases at nearly 13%.
As for specific line impacts, Umbrella and Cyber policies saw the greatest hits on underwriting capacities. These led to insurance challenges in 2021, with 80% of Umbrella underwriters, for example, reporting decreased capacity. Cyber underwriters, whose clients were particularly impacted by the explosion of remote work, reported diminished capacity at a rate of 73%. Still, the demand for Cyber policies continued to rise, despite the decreased capacity and increased premium prices.
How did the Pandemic Impact the Market?
The impact of the pandemic on the Commercial Property/Casualty market cannot be overstated. In a COVID-19 supplement to the index, the Council reported three major impacts on the industry:
1. Increased premium pricing
2. Decreased availability of coverage
3. New underwriting trends, including communicable disease and pandemic exclusions
These trends present both insurance challenges and opportunities in 2021 for businesses.
First, keep in mind that the Index Report outlined above is a trailing report. That means it is only reporting on what has already happened. It cannot predict the future, even though we all wish we had a magic crystal ball right now.
We’re undoubtedly at a critical junction in history and in business as we come out of the pandemic. While businesses are starting to see a lessening of pandemic restrictions, they may not be feeling any insurance-related benefits.
Going into renewals, however, it’s important for companies to be armed with the best information to obtain the best coverage. Here are some of our recommendations for procuring coverage in a post-pandemic world in light of these emerging insurance trends.
#1: Maintain a Good Negotiating Position
In many respects, your insurance history predicts your insurance future. This is why it’s critical to keep existing policies current, premiums paid, and claims to a minimum. This will put you in a strong position when negotiating a renewal, ensuring that your business’s past actions can’t be used to justify higher rates.
Also stay informed about the market that applies to your business. Seek two or three quotes from reputable brokers before beginning the insurance policy renewal process. Question rates that seem too high or too out of line with prior premiums. Make sure you understand the legalities of insuring businesses within your industry. Research state limits, insurance caps, and any other statutory mandates that may impact your lines.
If your underwriters are trying to operate outside of these boundaries, let them know they risk losing your business.
#2: Understand the Uncertainties
If COVID-19 taught us anything, it was that the unthinkable can happen at any time—and that caution is critical. Keep these principles in mind as you analyze existing coverage for your property, casualty, auto, and employment lines. But also remember what it looks like to return to normal.
When it comes to auto coverage, for example, have you considered that the reopening of businesses means that more cars will be back on the roadways? That almost certainly means that more accidents will occur.
With casualty or D&O lines, it’s important to remember that the court systems are just now returning to full capacity. That means that lawsuits that were put on hold or severely delayed due to COVID will be heading back to court. Verdicts will be rendered, and insurance will be needed.
But perhaps most importantly, we never know when the next major disaster will strike. This makes coverage like catastrophic insurance important to consider as part of your risk management strategy.
#3: Partner with a Proactive Insurance Broker
To truly manage your risk, you need a proactive insurance partner who is tuned into the constantly shifting market. With over 18 years in the insurance industry, Roger has a proven track record of generating outstanding results. Having successfully represented many high-profile domestic and international corporate clients to the marketplace, he is an idea-driven broker committed to strategizing with clients to protect their biggest assets.
We specialize in insurance transactions and risk consulting as it relates to real estate purchases, sales, contractual issues, claims advocacy, policy interpretation, coverage analysis, risk management surveys, coverage design, and emergency response and contingency planning. For businesses that need something more specialized, our team can develop custom related insurance programs. Get in touch today to discuss your specific needs.
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Questions to Ask Before Your Next Renewal
While the uncertainties are undeniable, you can prepare for your company’s insurance policy renewal process simply by performing an honest analysis of your business needs. Ask yourself, for example:
- What are our post-pandemic goals?
- If we achieve these goals, are current coverages sufficient?
- Did the pandemic make us aware of any new risks we want to insure against?
- Have our employee numbers decreased as a result of the pandemic?
- Are your cyber policies sufficient? (This question applies if you plan on keeping workers remote).
If your business isn’t currently protected in all the areas you think you may need, now is the time to get adequate insurance coverage. Contact Roger today to start planning ahead.
Conclusion
Emerging trends in commercial property and casualty insurance include rising premium prices and decreased coverage availability due to the COVID-19 pandemic’s lasting impact. Key areas affected are umbrella and cyber policies, with significant decreases in underwriting capacity. Businesses should maintain a good negotiating position, understand new uncertainties, and partner with proactive insurance brokers to manage risks effectively. Preparing for renewals with thorough market knowledge and an honest assessment of business needs is essential for obtaining the best coverage. Readers are invited to contact Roger J. Stewart for the latest trends in commercial property and casualty insurance.
