Inflation, massive hurricanes, and flooding. All played a role in once again driving up premiums for a mix of business insurance policies in the third quarter, according to the latest Council of Insurance Agents and Brokers survey.
The survey results, based on responses from insurance brokers nationwide, showed average premium increases of 8.1% across all account sizes, up from 7.1% in the second quarter.
It was the 20th consecutive quarter in which premiums increased, part of what’s known in the insurance industry as a “hardening” of rates, a cycle that began in late 2019.
On the brighter side, the CIAB survey found workers’ compensation premiums continued to fall, at an average of negative-0.7%. It was the only line that saw a decrease in the quarter.
The survey also found that:
- Cyber coverage remained a big concern, with many of the respondents reporting strict underwriting by carriers, reduced limits, and higher deductibles across the board. Cyber insurance, in fact, saw the largest rate change, climbing by 20.3% in the third quarter.
- Inflation was (and continues to be) responsible for driving up repair and materials costs, and, in turn, pushing up property and auto rates. Property premiums rose by 11.2%, while auto climbed by 7.6% in the quarter.
“We all know inflation has definitely had an effect on construction costs,” explained Guffy Wright, the Real Estate Practice Leader at The Mahoney Group. “That, in turn, often meant much higher property values and so carriers are raising premiums to insure assets that would cost more to repair or build.”
Natural catastrophes also impacted commercial property rates. Hurricane Ian in Florida, flooding in Kentucky and Tennessee, and wildfires in the Northwest together triggered hundreds of billions of dollars in damage claims. More than 30% of respondents reported an increase in flood claims alone in the quarter, compared to 8% in the second quarter.
Property coverage for multifamily owners in coastal or high-wind areas has been an especially difficult category for brokers to place. Many owners of these properties are seeing increases as high as 30% at renewal, along with higher deductibles and more restrictive limits.
Elsewhere, umbrella insurance rose by 11.3% in the quarter, Employment Practices Liability jumped 7.1%, and Directors and Officers coverage climbed by 7.3%.
To read more about why rates for different lines of coverage have been rising, along with tips on how to keep your premiums under control, click here for The Mahoney Group’s 2022 Market Report and Forecast.
The Mahoney Group, based in Mesa, Ariz., is one of the largest independent commercial insurance and employee benefits brokerages in the U.S. For more information, contact us online or call 877-440-3304.
This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.