ARLINGTON, VA, April 7, 2022 — Amid a steady deceleration of rate increases, 2022 is starting to demonstrate a shift toward normalcy for the commercial insurance market. Buyers are still seeing rate increases; however, many of those increases are now dropping to single digits and even flat renewals, according to the 2022 Marketplace Realities Report, Spring Update by WTW (Willis Towers Watson, NASDAQ: WTW), a leading global advisory, broking and solutions company.
While the market is appearing to stabilize for commercial rates, we are nowhere near a soft market, WTW business leaders say. Leaders in 79% of WTW’s commercial business lines forecast continued rate increases, however these are slowing significantly.
The standout across the industry is the cyber market, where buyers are seeing higher increases than just a few months ago. Rate increases as high as 100% to 200% are commonplace in the cyberinsurance market today, making cyber a very difficult market for commercial buyers to navigate. Factors including overall claims activity, evolving regulations and an ever-growing complicated risk environment are collectively providing headwinds to slowing cyber rate increases.
In an increasingly challenging global environment with military conflict in Europe, continued supply chain backlogs, accelerating inflation and a more expensive borrowing landscape with the Federal Reserve’s recent rate increase, markets will likely see uncertainty and volatility.
“While we continue to see rate increases across most lines of business, the silver lining is that the increases are decelerating and beginning to stabilize.”
Jon Drummond | Senior Editor, Insurance Marketplace Realities, Head of Broking, North America, WTW
Jon Drummond, senior editor, Insurance Marketplace Realities, and head of Broking North America, said, “While we continue to see rate increases across most lines of business, the silver lining is that the increases are decelerating and beginning to stabilize.”
A confluence of factors is suggesting that higher interest rates and rising inflation won’t be transitory and instead will be a part of our economic environment for awhile. Commercial buyers that are proactive with their risk planning strategy will be best positioned to absorb the increases, rising interest rates and record-breaking inflation.
| Property | ||
|---|---|---|
| Non-challenged occupancies | Flat to 10% | |
| Challenged occupancies | +15% or more | |
| Domestic casualty | ||
| General liability | +4% to +10% | |
| Umbrella (high hazard) | <+20% | |
| Excess (high hazard) | <+15% | |
| Workers compensation | –2% to +4% | |
| Auto | +5% to +12.5% | |
| International | Flat | |
| Executive risks | ||
| Directors’ and officers’ public company (primary) | Flat to +20% | |
| Directors’ and officers’ private/not-for-profit (overall) | +5% to +20% | |
| Errors and omissions (large law firms) | +5% to +10% | |
| Employment practices liability (primary) | +5% to +15% | |
| Fiduciary (financial institutions) | +10% to +25% | |
| Cyber | ||
| +100% to +200% | ||
| Political risk | ||
| Most risks | Flat to +20% | |
| Terrorism and political violence | ||
| Terrorism and sabotage | +5% to +10% | |
| Political violence | +10% to +20% | |
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