Insights

Competitive Pricing Continues in the Commercial Market: A Q2 2022 Update

August 16, 2022

/Property & Casualty/Management Liability/D&O

The outlook for commercial insurance buyers continues to improve as we enter the second half of 2022. After several years of increasing rates across almost every segment of the commercial space, most insurers are reporting strong earnings and healthy balance sheets. This is leading to some more competitive pricing in the market, especially for high quality risks.

In this Q2 2022 Commercial Market Update, we explain pricing trends in the D&O, Property, Casualty, Cargo, and Cyber segments, including where buyers should expect decreased premiums and where rate increases and coverage restrictions continue. Read on for the key highlights, or download the full report here:

Commercial Lines Market Update Q2 2022 Cover

Expect Relief in the D&O Segment

The Directors & Officers (D&O) environment changed quickly through the second quarter, and most publicly traded companies can expect decreasing premiums at renewal. Corporate earnings remain strong, which gives underwriters more confidence in offering competitive quotes. Also, the volatile financial markets have significantly slowed IPO activity in 2022. Insurers that grew new business in the 2021 IPO boom are now looking for other places to grow, and publicly traded D&O buyers are experiencing the benefit of this increased competition.

Rates Remain Flat for Property & Casualty

In the Property & Casualty segments of the market, the decelerating rate increases we reported in Q1 have continued. In fact, many buyers can expect flat rates with their property and casualty renewals. As we emerge from the pandemic lockdowns, companies are growing again, and the associated exposure growth will lead to buyers paying more premium dollars even though their rates may be flat.

Property valuations continue to be an area of focus for insurers, especially with increasing inflation. Expect insurers to ask questions about your property values and, in some cases, push for valuation increases if they believe a property is undervalued.

Stabilization is Under Way for the Casualty Market

Primary casualty insurers continue to seek rate increases on general liability (GL)/auto insurance for the 19th consecutive quarter to keep up with loss trends. Workers’ compensation (WC) is the most competitive and profitable line of coverage, but with medical inflation driving increases in the average cost of indemnity claims, the market’s combined ratio is trending up. Finally, the high excess market has stabilized while lead umbrella insurers continue to achieve rate increases.

The Cyber Segment Is Still a Challenge

Unfortunately, there are no improvements to report in the Cyber segment. We’ve been commenting on premium increases and coverage restrictions for the past 12 months and the trend continues—we expect these conditions to persist through 2022. If your company has strong controls in place, you will have a better result than companies with weak controls. Regardless, all buyers should be prepared for an extensive underwriting process that will include a long questionnaire and follow-up questions.

For more insights into the insurance impact of the second quarter of 2022, download your copy of the Commercial Lines Market Update.

Commercial Lines Market Update Q2 2022 Cover

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All views expressed in this article are the author’s own and do not necessarily represent the position of Woodruff-Sawyer & Co.

Carolyn Polikoff

Senior Vice President, National Commercial Lines Practice Leader

Carolyn oversees our firm’s property & casualty and management liability services on an enterprise-wide basis, working to ensure consistent client service and strategy under a unified national structure.

415.402.6513

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Carolyn Polikoff

Senior Vice President, National Commercial Lines Practice Leader

Carolyn oversees our firm’s property & casualty and management liability services on an enterprise-wide basis, working to ensure consistent client service and strategy under a unified national structure.

415.402.6513

LinkedIn