Hard market conditions continued last quarter with premium price increases averaging double digits, according to a new survey.
The Council of Insurance Agents & Brokers’ (CIAB) quarterly index found the average premium for all-sized accounts jumped 11.7% in Q3 2020 compared to the previous quarter. It is the 12th consecutive quarter of increasing premiums across all-sized accounts.
“It’s clear the pandemic has accelerated the market conditions observed in previous quarters,” CIAB president and CEO Ken Crerar said in a statement. “The financial stress from the extended economic contraction has contributed to increased premium pricing across the board, heightened insurer wariness and reluctance to take on additional risk.”
According to the index, Umbrella saw the highest average price jump at 22.9%. Directors & Officers (D&O) also recorded a significant average price increase of 16.1%, followed by Commercial Property at a 14.2% rise.
Respondents to the CIAB survey cited social inflation and nuclear verdicts among the primary drivers for the sizeable increase in premiums. “The nuclear decisions in court are hitting [carrier] layers more and more,” said one respondent from a mid-sized Northwestern firm.
Along with price increases for Umbrella, D&O, and Commercial Property, capacity for all three of those lines significantly decreased, according to the index.
Insurance brokers also reported calls for increased deductibles, lower limits, and cutbacks on coverage. Communicable disease exclusions are also becoming standard.
With the hard insurance market spilling into a third year, the question becomes how long will it last?
While no precise end date can be given, a Willis Towers Watson’s analysis says insurance buyers should plan for continued increases in nearly every coverage line thorugh 2021.
“In the few cases where rate reductions were considered possible last spring, this time the best outcome buyers can hope for is flat renewals,” the report said.
Willis sees property, umbrella, D&O, and fiduciary as the lines with the most challenges.
“As we look to the future, we are confident that analytics, judgment and relationships will bring this difficult market to a new equilibrium that provides customers with protection from emerging risks and growing volatility,” the Willis report said.
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