Pivoting to a New Normal
The last two years have been challenging for insurance buyers, but the tide appears to be turning.
As the economy reopened in 2021 and premiums grew, insurance pricing increases began to moderate, and renewal results became more predictable. This moderation not only continued but accelerated in the second half of 2021, helping to drive a more buyer-friendly marketplace entering 2022.
Even as conditions improve, however, the property and casualty industry faces a number of headwinds, including inflation, supply chain challenges, climate change and the conflict in Ukraine. In Lockton’s March 2022 market update, we outline these trends and preview what buyers should expect in upcoming renewals across major lines. Highlights include the following:
Workers’ compensation remains a profitable line for insurers, but they continue to monitor the potential long-term implications of a rise in “mega” claims and an aging workforce. Auto liability, on the other hand, remains unprofitable as insurers continue to struggle with nuclear verdicts and rate adequacy.
Umbrella and excess insurers continue to raise pricing and introduce more restrictive terms, although conditions are now decidedly more favorable to buyers than in 2020 and early 2021. Pricing for general liability also continues to increase, but at a slower pace than umbrella and excess liability.
The property insurance marketplace remains bifurcated; insureds with limited catastrophe exposures and few losses are able to secure pricing reductions, but the market is far less favorable to those with CAT exposure and in challenging industries.
After three years of D&O pricing increases amid a difficult claims environment, competition is returning and helping to keep pricing increases in check.
As ransomware attacks grow in frequency and severity, cyber insurers continue to seek pricing increases and insist on coinsurance and sublimits for ransomware.
Explore Lockton’s March 2022 Market Update (opens a new window) for more information.