Planning for 2022 Property & Casualty Insurance Increases

December 8, 2021
Planning for 2022 Property & Casualty Insurance Increases

No one has a crystal ball, but we can make analytical predictions about what’s going to happen with property and casualty insurance premiums in 2022. We’ve done this by looking at what’s happened in the past along with expectations for the markets next year.

The Council of Insurance Agents and Brokers reports a slight downward quarterly trend for P&C premium hikes over the last year.

  • 4th quarter of 2020: The average total premium increase was 10.7%
  • 1st quarter of 2021: Average shifted to 10.2%
  • 2nd quarter of 2021: It came down to 8.3%.
  • 3rd quarter of 2021: It came back up slightly to 8.9%.

Although premiums are likely to keep increasing, there is hope the trend may come down somewhat.

Of course, expectations vary by line across all industries. Individual exposures, claims history and risks will play a vital role for each company and their premium increases for next year. By looking at several sources, we were able to come up with some rough estimates for 2022 national increases among all industries and sizes:

Commercial Auto          10 – 12%
General Liability             8 – 10%
Commercial Property     8 – 10%
Workers’ Comp              1 – 3%
Umbrella/Excess            15 – 30%
Cyber                             15 – 30%

A major factor in these increases is inflation. As the cost of goods continues to rise and hourly wages go up, they have a direct impact on payroll and sales, which affect premiums. Much of this is being driven by supply chain issues and a labor shortage.

Social Inflation Drives Increase in Umbrella/Excess

A phenomenon called “social inflation” is fueling this increase. Social inflation refers to the growing distrust of corporations, litigation financing and authority in general. These factor are fueling an increase in the frequency and size of severe liability losses. The umbrella/excess line of coverage will likely continue to increase throughout 2022.

Why Cybersecurity Insurance is Increasing

Cybersecurity premiums are seeing a huge increase, as well. They went up 27.6% in the third quarter of 2021. Cyber insurance has historically been under-priced because it was new and had relatively few users. Lack of historical data and claims kept premiums low. But the number of ransomware, phishing and social engineering attacks has skyrocketed, and payouts are going up accordingly.

Adoption and Foster Care Have Fewer Carrier Options

In addition, nonprofits in the adoption and foster care areas are finding it harder to even find coverage. Many states are lengthening the statutes of limitations on abuse claims, and awards are trending higher and higher, which has priced many carriers completely out of the market.

How to Manage Your Increases

Workers’ Comp: The largest opportunity for managing premiums is for Workers’ Comp. Taking steps to bolster your culture of safety can make a big difference. It pays to revisit your safety program.

  • Have you created, documented and communicated a formal safety program?
  • Are frontline supervisors executing on the safety program?
  • Do you have safety talks every morning before firing up your manufacturing line, beginning a construction project or starting the day at your nonprofit?
  • Do you have a return-to-work program with light-duty requirements?

Your broker can help you track these steps, apply as many credits as possible and negotiate pricing based on them, as well as your loss track record.

Auto: You can affect your auto coverage rates by keeping claims down with these tactics:

  • Set expectations about distracted driving.
  • Consider automated accountability measures, like telematics apps.
  • Carefully select drivers.
  • Establish a driver training program.
  • Recognize positive driving behavior.

Overall: What’s your renewal strategy? Is it time to negotiate with your carriers or perhaps take your business to the market? Can you look at different deductible structures? Or are you in a position to retain some of your own risk by joining a group captive?

My fellow Miller Group advisors and I can help you investigate these options and more. Call us at (816) 333-3000.