Umbrella, Cyber Lines Particularly Challenged during First Quarter

Commercial insurance premiums continued to increase during the first quarter of 2021, according to results from the Council of Insurance Agents & Brokers (CIAB) first-quarter 2021 Commercial Property/Casualty Market Index.

Despite the increases, there were further signs that the COVID-19 pandemic's impact on existing market conditions has eased, according to the CIAB.

Across all sizes of accounts, the average premium increase was 10 percent during the first quarter, the 14th consecutive quarter of increased prices, the CIAB reported. The first quarter's increase was down from the prior quarter's 10.7 percent increase, however, and down further from the 11.7 percent increase during the third quarter of 2020.

Large accounts felt the greatest impact, with an average premium increase of 12.9 percent.

Once again, umbrella was the line of coverage with the highest average premium increases during the first quarter at 19.7 percent.

Premiums for cyber insurance were next, increasing 18 percent. The cyber increase was a "significant divergence" from the line's typical 1 to 2 percent increases, a CIAB statement said, noting that survey respondents attributed the leap in premiums to the increased frequency and severity of ransomware claims.

"Umbrella and cyber continued to pose problems for brokers in Q1 2021," Ken A. Crerar, president and CEO of the CIAB, said in the statement. "Carriers continued to push for rate increases in umbrella noting factors such as nuclear verdicts or social inflation and began to pull back on cyber risk in the face of rapidly increasing claims from ransomware and attacks that exploit the remote workforce. Though COVID-19 infection rates have been steadily decreasing and employers are beginning to bring their employees back to the office, brokers will need to brace for the aftershocks as we return to a new normal."

The CIAB found capacity continuing to contract in troubled insurance lines during the first quarter. Some 73 percent of respondents reported a decrease in capacity for cyber, with 79 percent noting capacity decreases for umbrella insurance. Respondents also noted vastly increased scrutiny of renewal applications, increased deductibles, restricted terms, the addition of communicable disease exclusions, and inquiries on what actions policyholders were taking to manage COVID-19-related risks, the CIAB said.