The past few years have been challenging for both businesses and the insurance industry. After years of stability, a confluence of factors have led insurance companies to reevaluate their positions in the market. The increased frequency and severity of claims, social inflation, the COVID-19 pandemic, medical inflation, trends in cybercrime, the cost of reinsurance, natural disasters and investment returns have all fundamentally reshaped the insurance market as we know it.
Like many other sectors of the economy, the commercial insurance industry experienced further changes to both its market cycles and its operating procedures. In particular, 2021 once again accelerated a hardening insurance marketplace—one that is less friendly to insurance buyers—which is now nearly two years old. For many, lines of insurance capacity left the market, reinsurance became more expensive, underwriting got stricter and—most importantly—premiums continued to rise.
What’s more, businesses have had to contend with a host of new and ongoing challenges over the past year. Specifically, 2021 saw the second year of the COVID-19 pandemic. And while some businesses were able to resume operations similar to their pre-pandemic norms, other businesses struggled to regain their footing. Further complicating matters, 2021 saw an acceleration of supply chain issues and labor shortages. All of these factors have profoundly affected many industries’ ability to operate at full capacity.
While the hard insurance market remains, there are some positive indicators for businesses. In the second half of 2021, we saw a gradual softening of the insurance market for certain lines. While insurance prices are still above their historical averages and insurance companies are applying rate increases, the scale of such increases has decelerated. Yet, there are several exceptions to this trend. In particular, cyber liability, fiduciary liability and commercial auto insurance are all still in the midst of hardening markets.
Going into 2022, we expect a challenging insurance environment to remain, but one that will look better than 2021 for many insurance buyers. However, there are a number of exceptions. Now more than ever, it’s essential for businesses to take a proactive approach to bolstering their risk management efforts and securing adequate insurance coverage. In other words, amid an insurance and risk environment with many unknowns, businesses should focus on addressing the factors they can influence.
Nevertheless, you are not in this alone. To help you navigate the insurance market, you need an insurance professional who understands your business, helps you plan for unique risks and advocates on your behalf. Secondly, you need insurance professionals who can tell your story to insurance carriers in a way that will best position your business come renewal time. Third, you need to work with an insurance professional who understands the dynamics of the current insurance market cycle and how to navigate a hard market successfully. Lastly, you need an insurance professional who fully understands your industry, the dynamic insurance landscape and how to provide targeted loss control solutions.
Remember, in these challenging times, InterWeb Insurance is here to provide the insurance guidance and expertise your business needs. We’ve put together this helpful resource that covers market trends, employment practices, cyber security and more! Click here to download the full copy and don’t forget to reach out if you have any questions about your coverages for 2022!