Agency Checklists received this week, “The State of the Market Report,” just issued by Risk Strategies. This online 55-page report focuses on the 2022 state of the insurance markets for ten industries and nine product areas. The report provides information about the developing issues facing these industries and the product lines covered in the report.
The industries discussed in the report include:
| Aviation | Education | Entertainment | Fine Art | Surety |
| Health Care. | Marine | Private Equity | Professional Services | Transportation |
The insurance product areas covered in the report are:
| Captives | Casualty | Cyber | Employee Benefits | Environmental |
| International | Management Liability | Private Client Services | Property |
For each of the industries and the product areas, Risk Strategies’ national practice leaders give their opinions about the present and emerging issues affecting risk management and underwriting for each of these industries and product lines.
The major trends according to the report
The major takeaways and implications from the report affecting the insurance market for 2022 are that business will continue to see:
- Premium Increases and Hard Markets.
- Stringent Carrier Underwriting.
- Alternative Risk Sharing Options Expanding.
Rate Forecasts for 2022—Higher and Higher
In the Rate Forecast section, the report gives 2022 anticipated premium increases for each of the industries and product lines included. Almost all the industries and product lines show expected premium increases in excess of 10%. However, cyber coverage shows an increase of more than 30%.
Some highlights sampled from the report’s sections
A few interesting points from the report on industries and coverage areas, in no particular order, are bullet-pointed below:
Entertainment Industry
The entertainment industry is an industry that probably most Agency Checklists readers would not be dealing with very frequently, if ever, for placing or underwriting insurance. However, this section has some interesting facts, including the losses suffered in the pandemic, as quoted below:
- Insurance rates for Film and TV businesses increased by 50% or more in 2021.
- Total market losses related to the pandemic, including reinsurance, are anticipated to easily exceed $10 billion, with many individual carriers reporting losses to written premiums of 10:1.
Education
- Higher education has had management liability rate increases because of employment practice liability (EPLI). EPLI claims rose in 2021, and, as a result, educational institutions are expected to see EPLI rate increases of 10%- 30% in 2022.
- Risk Strategies’ clients saw an average 89% rate increase in Q4 of 2021.
- Primary insurers are raising rates, increasing self-insured retentions, and restricting coverage.
Transportation section.
- Fewer drivers to service a major increase in last-mile delivery due to higher consumer demand.
- Major driver and vehicle shortages affecting an already hard market.
- Claim severity is on the rise.
The report estimates commercial auto rate increases for 2022, with auto liability up 15% to 20%, physical damage up 20% to 25%, and umbrella coverages increasing between 25% and 100%.
Captives
Not surprisingly, the section on captives anticipates continued growth in the use of captives by companies in the mid-market space in response to the hardening of the market. One interesting development noted in the report is that these companies are beginning to use captives to provide business interruption and contingent business interruption coverage for events, such as pandemics, that are not otherwise insurable in the commercial market.
Private Equity
- The number of securities class action lawsuits declined in the past year.
- In 2021 there were 210 federal court securities class action lawsuits, a 34% decline from 2020.
The report opines that if this downward trend on securities class action filings continues through 2022, it will favorably affect the overall D&O market.
Finding useful information on different insurance areas
I found the report extremely educational and professionally written. A number of the summaries of the industries or product areas provide information that is hard to find. For example, I searched for a quick summary of warranty insurance used to guarantee the terms and conditions of corporate mergers and acquisitions. The report’s section on Private Equity gave a quick thumbnail of the deal size and premium cost for such insurance that I found highly informative.
An informative read
In my opinion, the report is well-written, succinct, and informative, and I recommend it to any of our readers who are interested in any of the industries or product areas the report covers. The report is available online by clicking on the following link:
“The State of the Market Report”
About Risk Strategies
Risk Strategies is a specialty national insurance brokerage and risk management firm offering comprehensive risk management advice and insurance and reinsurance placement for property & casualty, employee benefits, and private client services risks.
With more than thirty specialty practices, Risk Strategies serves commercial companies, nonprofits, public entities, and individuals and has access to all major insurance markets. Ranked among the top brokers in the country, Risk Strategies has over one hundred offices, including Boston, New York City, Chicago, Toronto, Montreal, Grand Cayman, Miami, Atlanta, Dallas, Nashville, Washington DC, Los Angeles, and San Francisco.
