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US commercial insurance premium increases slow in Q1 2022: CIAB

27th May 2022 - Author: Luke Gallin

U.S. commercial insurance premium prices increased for the 18th consecutive quarter in Q1 2022, although the pace of growth slowed when compared with the final quarter of last year, according to data from The Council of Insurance Agents & Brokers (CIAB).

rate-movementsThe CIAB’s Commercial Property/Casualty Market Report Q1 2022 shows an average premium increase across all account sizes of 6.6% in Q1 2022. However, most lines showed lower increases when compared with the previous quarter, which saw an average premium increase across all account sizes of 8.7%.

In Q1 2022, across the five major lines of business (commercial property, commercial auto, umbrella, general liability, workers comp), premiums increased by an average of 5.7%, compared with 8.1% in Q4 2021.

According to the CIAB, the majority of lines saw rate increases 2% lower than in Q4 2021.

But while price moderation was evident across the board, the CIAB notes that cyber remained an issue for brokers with premium prices increasing by an average of 27.5%, compared with 34.3% in Q4 2021.

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“According to respondents, some of the primary drivers for the continued price increases were the increasing frequency and severity of cyber claims. Tension caused by a combination of between reduced carrier appetite for the risk and high demand was also a key driver,” says the CIAB.

The data also reveals that commercial property was a focus in the opening quarter of the year, with respondents noting challenges driven by rising property values on the back of lower capitalisation rates, as well as high demand for commercial property.

“Naturally, there was a need to update valuations to reflect the increased value of the property to ensure policyholder risks were properly insured. Brokers pointed out those corrections often meant increased premiums, as higher valuations meant higher total insurable value, which meant more exposure for carriers,” says the CIAB.

According to a respondent from a large Midwestern company, “Property carriers were closely monitoring who they insured and how much they placed on risks. The capacity may still be there but [carriers were] getting super picky about how they were using it.”

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