Where insurance prices will moderate in 2022. And where they probably won’t.

Commercial insurance prices in general are expected to stabilize in 2022, but not in cyber where increases of 50% to 150% could occur, according to a brokerage’s forecast.

Willis Towers Watson also said in a report that while the industry can expect prices to moderate in general, fiduciary liability insurance can be another exception along with cyber. The rates within these two lines have risen sharply, and in the case of cyber, the increases it plans for 2022 are even larger. The company sees prices for trustees for financial institutions soar by 15 to 50% next year.

“For the most part, we’re heading for stability as we watch a simple economic law work – supply and demand,” writes Jon Drummond, editor, Insurance Marketplace Realities and head of brokerage, North America. North at Willis Towers Watson, in the report. “This does not mean, however, that this is a mere bargain.”

According to the publisher, there is a two-tier market in many industries with better conditions for better risks and harder for less attractive risks. The bottom line is that most buyers will pay more for short-term insurance, but it should be “less painful” and the downside to customers at the highest risk level shouldn’t be so bad.

“For better or for worse, our industry will continue to evolve with the laws of supply and demand,” he writes.

Drummond adds that if the offer continues to come back as it did in the second and third quarters of this year, rate cuts could start as early as the second quarter of 2022, but not on all lines, and cybersecurity will continue to be a challenge well beyond 2022.

Some of the price predictions from the report:

  • Commercial real estate coverage for uncontested occupations is expected to increase between 2% and 10% in 2022, but contested occupations are expected to experience increases of 15% or more.
  • There is a range of forecasts in the domestic P&C lines, including single- and double-digit price increases for liability and auto. Small to medium double-digit price increases are likely for umbrella (high risk) and excess (high risk). International is expected to be stable and workers compensation is expected to range from a 2% decrease to a 4% increase, according to the report.
  • For executive risks, directors and managers of public (primary) companies will see flat rate increases to 25%. D&O for the private / non-profit sector (globally) is expected to increase from 5% to 40%. Large law firms’ E&Os are expected to see rate hikes rise between 5% and 10%. Responsibility for employment practices (primary) is expected to jump from 10% to 30%, and fiduciary responsibility (financial institutions) is expected to rise from 15% to 50%.
  • Terrorism and political violence rates are expected to be stable at 20% higher next year.

Source: Willis Towers Watson Insurance Market Realities 2022 Report.

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