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Survey Report

Insurance Marketplace Realities 2022 – Introduction/Executive Summary

Marketplace old and new: Supply and demand, data and analytics

By Jon Drummond | November 15, 2021

Rate predictions, forecasts and market insights for 20+ lines of insurance across North America

The hard commercial insurance market continues, but as a steady, gradual softening brings a welcome deceleration in premium rate increases, we are reminded of one of the oldest and most fundamental marketplace principles: the law of supply and demand. Supply, in the form of additional capacity provided by insurance carriers, is up, and a rise in supply is doing what it does best: lowers prices.

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Commercial lines insurance pricing survey (CLIPS)

Our rate predictions in the following pages of Insurance Marketplace Realities are relevant to the commercial insurance marketplace in which we trade (i.e., the mid-market, national and global segments). When we assemble our forecasts for the coming year, we also look back at recent price movements reported by insurers, grounding us in firm data. CLIPS, Willis Towers Watson’s retrospective look at commercial P&C prices, is based on both new and renewal business figures, across all segments (including small commercial and so-called “main street” business), obtained directly from carriers underwriting P&C business. (In our experience, insurance rate fluctuations are considerably more pronounced for larger buyers than for smaller buyers.) CLIPS participants represent a cross section of U.S. P&C insurers that includes many of the top 10 commercial line companies and the top 25 insurance groups in the U.S.

According to the most recent CLIPS survey, U.S. commercial insurance prices grew again in the second quarter of 2022. Looking back more than a year for some perspective, the report says the aggregate commercial price change reported by carriers grew by over 6% for the first quarter of 2020, then spiked upward to nearly/above 10% in the second through the fourth quarters of 2020, and then declined to just below 8% in the first quarter of 2021, before settling at just above 6% in the second quarter of 2021. Increases in the lines that have seen the hardest market conditions have eased.

For more, review the recent CLIPS report.

What brought about this rise in supply? A leading factor is of course the hard market. Higher rates offer improved rate adequacy and the opportunity for greater return on capital committed by insurers and other investors in the insurance marketplace. After several annual cycles with steep, often relentless increases, the marketplace has taken significant steps toward “correcting” itself – “correcting” from the point of view of the insurers. The forces that led to the hard market – systemic rises in risk from heightened cat losses likely driven by climate change, social inflation, rising exposures in areas ranging from cyber to liability – have not gone away. But one of the words that appears consistently through this publication, in our line-by-line predictions and commentaries on what we see ahead in 2022, is stability.

Two exceptions to the general trend are in cyber liability and fiduciary liability insurance. Rates have been going up steeply, and in the case of cyber, the increases we are forecasting for 2022 are even steeper. This does not contradict the rule, however. Losses are rising and capacity is tightening. Supply down, prices up.

So for the most part we are moving toward stability as we watch the workings of a simple economic law. That does not mean, however, that this is a simple marketplace. The two-tiered marketplace we highlighted in our last issue remains a reality in many lines of business: conditions are better for better risks and tougher — sometimes quite a bit tougher — for less attractive risks. The risk manager’s job of distinguishing his or her organization’s risks in the marketplace is more demanding than ever. More data and better data are required and expected, and the information must be presented in a way that is clear and compelling. Fortunately for insurance buyers, the tools to help analyze and present that data are getting better, too.

Here is where the idea of the new marketplace comes in. The new insurance marketplace is underpinned by risk analytics. It’s based on the unique and expanding insight available about perils across the spectrum and the greater amount of data that insureds have access to about their own exposures in particular. Then there are the analytics pertaining to the financing of risk, which involve taking business input, such as risk tolerance and strategic goals, and overlaying actuarial analysis across multiple lines of business to identify the optimal balance in terms of risk retention and risk transfer.

Another aspect of the new insurance marketplace has been brought on by COVID-19. We’ve discovered we can do our work remotely, most of it anyway, and that the virtual world has some advantages. It’s easier to bring people together for meetings, and for insurance buyers, bringing the C-suite to the negotiating table can have noticeably positive effects. Those meetings are also easier to organize virtually with underwriters sitting across the world and in venues some risk managers may never have had the opportunity to visit.  Employees within the industry, be they underwriters, brokers or risk managers, are enjoying the benefits associated with a commute to the living room versus the commute to the office.

However, it’s not necessarily all happy days between Zoom meetings and fancy statistics. Far from it. The responsibility of the risk manager is increasingly complex, overseeing the ever-evolving universe of data and analytics. At the same time, nothing will replace the relationships that are at the core of the insurance business and those relationship benefit from in-person connectivity. Many are reporting an emerging workday that never seems to stop. There are no after-hours — you’re just always on. How is the industry responding to talent development in this environment? Today’s younger generation certainly faces a different world from what many grew up with in the industry.

To sum up, and to return to the core topic of this publication, the cost of insurance is still going up – for the near term. Most buyers will be paying more, but marketplace results should be less painful. The two-tiered market, which has always been a reality to some degree, is still in effect in many places, but the downside of being in the higher hazard tier is not as bad. For better or worse, our industry will continue to move with the laws of supply and demand. If supply continues to come back as it has in Q2 and Q3 of 2021, we could see rate decreases commence as early as Q2 of 2022. This will not be a wholesale development across all lines, and distressed lines of business, most notably cyber, will remain challenged well into 2022.

Our subject matter experts have assembled excellent insights into the marketplace, and we look forward to helping you navigate the unique challenges of the day.

Looking forward, looking back

This issue marks the fourth in a row where the number of lines predicting rate decreases has come in at zero. However, the number of lines anticipating flat renewals or a mix of increases and decreases leapt from one to eight. In another good sign for buyers, 18 lines are predicted to produce increases lower than what our experts expected in the spring. In the case of umbrella and excess casualty, the relief from double- and sometimes triple-digit increases is as pronounced as it is welcome. D&O increases are easing and, looking ahead, some D&O buyers may see no increases at all — the first time in a long time.

One notable exception to the trend is in cyber insurance, where again rate increases have jumped — from +10% to +30% a year ago, to +25% to +50% in the spring, and now for 2022, +50% to +150%.

For the most part, however, these numbers and the line-by-line commentary included here tell a simple story: a rise in capacity has lifted supply, and the laws of supply and demand have come to the aid of the insurance buyer.

Here are highlights from our 2022 predictions:

  • Property rate increases are decelerating, especially for better risks; those buyers can expect increases of 2% – 10%. For challenged occupancies, rate hikes are forecast at 15% or more, which represents a continuing decline in increases over recent renewal cycles.
  • General liability predictions eased modestly: +5% to +12.5% (from +7.5% to +15%).
  • Auto rate forecasts similarly dropped slightly: +5% to +15% (from +8% to +15%).
  • Casualty excess liability predictions are now +15% to +30% or more for high hazard risks and flat to +15% for low/moderate hazard.
  • Workers compensation is one of the lines now looking at a mix of small decreases and increases: -2% to +4%.

In short, the marketplace improvement we saw in the distance in 2021 is coming into focus for 2022, though buyers will still be paying more for their insurance in most cases.

Market trends: lines facing increases, decreases or a mix*

Biannual rate comparisons
IMR issue Decreases Increases Mix/flat
2022 0 24 8
2021 spring update 0 30 1
2021 0 29 1
2020 spring update 0 23 5
2020 2 20 5
2019 spring update 2 14 9
2019 2 14 9
2018 spring update 2 10 10
2018 7 7 9
2017 spring update 10 6 7
2017 10 6 7
2016 spring update 9 8 5

* The 2022 edition includes middle market as a separate line of business. The 2021 spring update figures include marine hull/liability and marine cargo as separate lines. The 2021 figures include life sciences and alternative risk transfer predictions for the first time. The 2020 spring update figures reflect the addition of managed care errors & omissions as a separate line of business. The 2020 figures reflect the addition of personal lines and financial institutions as separate entries. The 2019 figures reflect the addition of marine, cargo and senior living/long-term care as separate lines of business. The 2018 spring update figures reflect the absence of marine in that issue; the 2017 figures reflect the addition of international coverage as a separate line, and the 2018 figures reflect the addition of product recall and the subtraction of employee benefits, which are no longer covered in this report. Casualty lines are discussed in one combined report but are included in this table as separate items (GL, umbrella/excess, auto and workers compensation).

For more insight on how you can prepare for a challenging marketplace, contact your local Willis Towers Watson representative.

Table of Contents


  1. Alternative risk transfer solutions (ART)

    Structured and parametric solutions are a popular alternative to traditional insurance still facing hard market conditions.

  2. Captive insurance

    Interest in traditional property and casualty captive programs remains high, but increasing consideration is given to emerging risks and risks not previously managed through captives.

Major product lines

  1. Property

    Rate deceleration continues, but an overall market shift is unlikely in the near term.

  2. Casualty

    The commercial liability marketplace is stabilizing, helping create opportunities to introduce alternative carrier solutions and competition

  3. International casualty

    International casualty market capacity remains stable, and flat renewals are expected for most buyers in 2022.

  4. Product recall

    Keep an eye on regulatory risk. Expect oversight activities and enforcement action to accelerate.

Professional liability lines

  1. Cyber risk

    Organizations that cannot demonstrate strong cyber risk controls, culture and overall cyber hygiene will face the high end of eye-popping increases.

  2. Directors and officers liability

    Rates, retentions and terms continue to see pressure, but capacity inflow has helped decelerate increases.

  3. Employment practices liability

    While the EPL rate environment is slightly improving, it is still a challenging market driven by uncertainty regarding COVID-19, vaccine mandates and lack of new competition.

  4. Errors and omissions

    Underwriters are putting significantly more weight on cyber exposure, fueling increased premiums on the entire E&O-related package.

  5. Fidelity/crime

    Fidelity/crime coverage continues to evolve with unique and sophisticated hacking and trickery schemes, though employee dishonesty claims remain the number one driver of crime losses.

  6. Fiduciary

    As some carriers effectively leave the space, premiums and retentions have been increasing substantially and are likely to continue to rise well into 2022.

  7. Financial institutions — FINEX

    Upward pressure on rates and retentions has eased and we expect further market stabilization and deceleration of increases through 2022.

Specialty lines

  1. Aerospace

    Rate increases are starting to plateau and increases have eased considerably as the airline industry has seen a replenishment of the global premium base with the return to air travel.

  2. Construction

    While rates are not expected to decrease any time soon, barring any unforeseen circumstances, the worst of the hard market is behind us.

  3. Energy

    Positive factors continue to limit the hardening market dynamic in upstream and downstream energy.

  4. Environmental

    We expect the environmental marketplace to respond to any challenges it may encounter with dynamic coverage and product innovations that will fuel its further expansion.

  5. Healthcare professional liability

    Healthcare professional liability rate increases continue to decelerate, and terms and conditions are stabilizing as well.

  6. Special contingency risks: Kidnap and ransom

    The special risks insurance markets have almost uniformly removed all cyber extortion coverage from their policy forms

  7. Life sciences product and professional liability

    The life sciences product/completed operations and errors & omissions marketplace continues to be stable for both primary and excess layers.

  8. Managed care E&O and D&O

    Insureds must understand that E&O, management liability and cyber are connected and following the same hard road.

  9. Marine cargo

    Rate increases have decelerated compared to what buyers saw from 2018 through 2020, largely thanks to renewed competition in the marketplace.

  10. Marine hull and liability

    The marine market remains firm, with underwriters still seeking increases on clean business while mandating cyber and communicable disease exclusions — for the first time on many policies.

  11. Middle market

    The middle market sector continues to see a two-tiered marketplace, though the number of insurance buyers facing challenging conditions has shrunk.

  12. Personal lines

    While massive rate increases for cat-exposed properties have been expected, the number of insurance buyers facing non-renewal action has been unprecedented.

  13. Political risk

    As pandemic-related aftershocks impact economic and political institutions, particularly in emerging markets, political risk is amplified.

  14. Senior living and long-term care

    While many coverage, program structure and capacity challenges remain, rate increases are stabilizing, and the emergence of new capacity will drive future competition.

  15. Surety

    Adverse conditions created by labor shortages and supply chain instability will impact both top and bottom-line results.

  16. Terrorism and political violence

    Despite prolonged periods of civil unrest and elevated levels of threat from organized domestic extremists and long-wolf shooters, the market continues to attract new entrants.

  17. Trade credit

    The trade credit market is softening. Given the lack of forecasted COVID-19 losses, rates are dropping on average of 5% to 10% and in some cases more for pristine deals.


Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed subsidiaries of Willis North America Inc., including Willis Towers Watson Northeast Inc. (in the United States) and Willis Canada, Inc.

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Insurance Marketplace Realities 2022 PDF 5.9 MB

Senior Editor, Insurance Marketplace Realities
Head of Broking, North America

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