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Where Insurance Prices Will Moderate in 2022. And Where They Probably Won’t.

Commercial insurance prices in general should stabilize in 2022, although not in cyber where increases from 50% to as much as 150% could be in store, according to one brokerage’s predictions

Willis Towers Watson also said in a report that while the industry can expect pricing to moderate in general, fiduciary liability insurance may be another exception along with cyber. Rates within these two lines have been going up steeply, and in the case of cyber, the increases it is forecasting for 2022 are even steeper. The firm sees prices for fiduciary for financial institutions climbing 15% to 50% next year.

“For the most part, we are moving toward stability as we watch the workings of a simple economic law — supply and demand,” Jon Drummond, senior editor, Insurance Marketplace Realities and head of Broking, North America at Willis Towers Watson, writes in the report. “That does not mean, however, that this is a simple marketplace.”

According to the editor, there is a two-tiered marketplace in many lines of business with conditions better for better risks and tougher for less attractive risks. The bottom line is that most buyers will be paying more for insurance in the near term, however it should be “less painful” and the downside for clients in the higher hazard tier should not be as bad.

“For better or worse, our industry will continue to move with the laws of supply and demand,” he writes.

Drummond adds that if supply continues to come back as it has in second and third quarters of this year, rate decreases could begin as early as the second quarter of 2022, although not across all lines, and cyber will continue to be a challenge well into 2022.

Some of the report’s pricing predictions:

• Commercial property cover for non-challenged occupancies should go up between 2% and 10% in 2022, but challenged occupancies should see hikes of 15% or more.
• There is a range of predictions within domestic casualty lines, including single to double-digit price hikes for general liability and auto. Low to mid-double digit price hikes are likely for umbrella (high hazard) and excess (high hazard). International should be flat, and workers’ compensation should range from a 2% decrease to 4% increase, according to the report.
• For executive risks, directors and officers public company (primary) will see flat to 25% rate hikes. D&O for private/non-profit (overall) should go up anywhere from 5% to 40%. E&O for large law firms should see rate hikes go up between 5% and 10%. Employment practices liability (primary) should jump 10% to 30%, and fiduciary (financial institutions) should climb 15% to 50%.
• Terrorism and political violence rates should either be flat to 20% higher next year.

Source: Willis Towers Watson 2022 Insurance Marketplace Realities report.