US property and casualty premium prices increased again in the second quarter of 2021, although the rate of increase continued to moderate, according to The Council of Insurance Agents & Brokers’ (CIAB) Q2 2021 Commercial Property/Casualty Market Index.
Prices increased for the 15th consecutive quarter at 8.3%, down from 10% in Q1 2021. Prices were still up for all lines of business in Q2 2021, including workers compensation. Umbrella saw an average premium increase of 17.4%, and directors and officers recorded average price increase of 13.4%. However, cyber stood out as the line with the biggest increase, with the average premium price up 25.5%, from 18% in Q1 2021.
Respondents to the index attributed the rapid increase of cyber premiums to a rise in ransomware and social engineering attacks, as well as the increased cost of claims due to litigation, according to the CIAB.
“Carriers continued to approach writing cyber risk with caution in Q2 2021,” said Ken A Crerar, president/CEO of the CIAB. “The rapid increase in ransomware attacks highlighted the need for brokers to work with clients to develop and practise robust risk management strategies to confront the growing threat. In a world where costly cyberattacks are becoming the norm rather than the exception, the broker is in a unique position to help clients identify vulnerabilities, find coverage and protect their firms.”
The index notes that underwriting capacity continued to contract for cyber and umbrella, with more than 80% of respondents noting a decrease in capacity for cyber and 73% reporting a decrease in capacity for umbrella. Respondents talked of slashed limits and increased retentions for cyber, and also said that carriers were much stricter when it came to insured risk management protocols, and imposing much higher premium increases should an insured’s risk management strategies be found insufficient.
More than three quarters (79%) of respondents said there was an increase in cyber claims in Q2 2021, supporting respondents’ assessments that the rise in claims was one of the main reasons for the rapid increase in cyber premiums, the index reveals.
In terms of account size, the index finds that large accounts experienced an average increase of 9.3%, compared to 12.9% in Q1 2021, while medium accounts recorded a slightly higher increase, at 9.4%, versus 10.9% in Q1 2021. Small accounts once again recorded the lowest average price increase, at 6.2%.