Premiums continued to rise in the first quarter of 2021, according to results from The Council of Insurance Agents and Brokers’ Q1 2021 Commercial Property/Casualty Market Index, though there were further signs the pandemic’s exacerbation of existing market conditions eased.
Across all sized accounts, the average increase in premium prices was 10 percent in the first quarter, the 14th consecutive quarter of increased prices, though down from the previous quarter increase of 10.7 percent, and down further from 11.7 percent in the third quarter of 2020. Large accounts were most impacted, with an average increase of 12.9 percent.
When segmenting the data by line of business, umbrella was again the line with the highest average increase in premiums, at 19.7 percent in Q1 2021. Notably, the line of business with the second highest increase in premiums was cyber at 18.0 percent. This marks a significant divergence from the line’s usual one to two percent increases. Respondents attributed this to the increased frequency and severity of ransomware claims, The Council said May 20 in a news release.
“Umbrella and cyber continued to pose problems for brokers in Q1 2021,” said Ken Crerar, president and CEO of The Council. “Carriers continued to push for rate increases in umbrella noting factors such as nuclear verdicts or social inflation and began to pull back on cyber risk in the face of rapidly increasing claims from ransomware and attacks that exploit the remote workforce. Though Covid-19 infection rates have been steadily decreasing and employers are beginning to bring their employees back to the office, brokers will need to brace for the aftershocks as we return to a new normal.”
Capacity continued to contract for troubled lines. Nearly three-quarters (73 percent) of respondents noted a decrease in capacity for cyber, almost the same as for umbrella (79 percent). Respondents also identified vastly increased scrutiny of renewal applications, increased deductibles, restricted terms, the addition of communicable disease exclusions, and inquiries on what policyholders are doing to manage their Covid-19 related risks.
Respondents remained laser-focused on driving organic growth and recruiting and developing talent in Q1 2021 – the latter of which was particularly challenging for many respondents due to issues with the current talent pool and the high turnover rate from Covid-19. Nevertheless, respondents were optimistic that there were significant opportunities for brokers in the coming year.
“I see the opportunities for brokers to play an integral part of a company’s health and profitability,” said one respondent from a large Southeastern firm. “In a world of uncertainty, the broker’s role now is more important than ever.”