Despite rate increases in the commercial insurance market beginning to decelerate, business leaders at insurance and reinsurance broker WTW feel “we are nowhere near a soft market.”
WTW’s latest Marketplace Realities Report shows that leaders in 79% of the broker’s commercial business lines forecast continued rate increases, although these are slowing significantly.
According to the report, 2022 is starting to show a shift towards normalcy for the commercial insurance market, as many of the rate increases seen by buyers start to fade to single digits and even flat renewals.
Across the commercial sector, WTW finds the cyber market as the standout, where buyers of protection are seeing higher prices than just a few months ago. In fact, rate increases as high as 100% to 200% are now commonplace in the cyber insurance market, which makes it a challenging market for buyers to navigate.
In the months ahead, WTW expects markets to see uncertainty and volatility as a result of an increasingly difficult global environment, characterised by Russia’s invasion of Ukraine, supply chain backlogs, accelerating inflation, and a more expensive borrowing landscape following the Federal Reserve’s recent rate increase.
“While we continue to see rate increases across most lines of business, the silver lining is that the increases are decelerating and beginning to stabilize,” said Jon Drummond, senior editor, Insurance Marketplace Realities, and head of Broking North America, WTW.
As noted by WTW in its report, the expectation is that higher interest rates and rising inflation will form part of the economic environment for some time to come.
“In short, buyers will still be paying more for their insurance in most cases. But in most lines, with the notable exception of cyber, improvement is expected to continue through 2022 — unless inflation and/or the crisis in Ukraine end up turning the direction of the marketplace,” says WTW.
