Key Insights For Q3 2021 Property & Casualty Market Trends

2021 Q3 Market Update

The hard market is not over yet, but there are signs of stabilization. In fact, AM Best has even changed its commercial market outlook from “negative” to “stable.” However, rising premiums are still not over according to the CIAB Q3 2021 State of the Market report. Pricing increased across all sized accounts for the 16th consecutive quarter, with rates climbing at 8.9% compared to Q2 2021’s 8.3% jump. Larger accounts once again felt the brunt of the hard market with an average pricing increase of 10.4%. Medium and small accounts saw 10.1% and 6.2% spikes, respectively.

Cyber continued to be the lead story when it comes to troubling lines of business. Pricing once again saw a significant uptick, with an average increase of 27.6%, up from a 25.5% increase in Q2 2021. As cybercrime continues to explode in both frequency and severity, Cyber Liability was the only business line that experienced a price increase of over 20% in Q3 2021. 

Cyber Liability

The meteoric rise of cyber premiums continued in Q3 2021 as pricing increased 27.6%. Cybercrime, ransomware in particular, has “exponentially increased in both frequency and severity,” and it shows no signs of stopping anytime soon. 

The massive shift to remote work because of the pandemic resulted in a dramatic increase in social engineering and phishing schemes as cybercriminals have continually preyed upon a much more vulnerable and shifting global workplace. Employees working off their personal Wi-Fi as opposed to their office networks have made it easier than ever to fall victim to a data breach. 

As a result of this increased vulnerability, insurers are completely changing how they write cyber business.  Carriers have been paying out more than ever before and more than their previous actuarial analysis could have predicted. This undoubtedly makes Cyber Liability a line to watch moving forward as the ongoing cybercrime epidemic continues across all industry sectors.

Commercial Property

Commercial Property lines increased 10.3% in Q3 2021, but perhaps more significant than the price increase is the increase in claims. We continue to see a wide spread on pricing depending on many individual factors on a risk by risk basis. Buyers with solid information and good claims history will be served better than the average risk. Claims activity for Commercial Property lines nearly doubled from Q2 2021, as 60% of CIAB survey respondents observed an increase in Property claims in Q3 2021.
Natural disasters and other catastrophic weather-related events have occurred at a record-breaking pace in 2021. An article from The Washington Post highlights all 18 of the billion-dollar natural disasters thus far in 2021, which have resulted in $104.8 billion in total damages. 

From the historic Ice Storm that plagued Texas in February to a busy hurricane season in the Atlantic that notably included Hurricane Ida’s crushing blow to the Gulf Coast, 2021 was a devastating year. Heading into Q4 2021 and beyond, Commercial Property lines will undoubtedly be under the microscope as the severe weather patterns observed over the past decade continue to present challenges. Recent expected insured losses from the swarm of tornadoes and severe convective storms that caused destruction in parts of the United States in December could amount up to $5 billion according to industry experts. 

Umbrella/Excess

Umbrella/Excess Liability prices were up 16.9% in Q3 2021, down slightly from the 17.4% increase observed in Q2 2021.

Though pricing is still on the rise, these increases are showing signs of slowing. CIAB survey respondents pointed to several positive signs in Q3 as the reasoning for this trend. Capacity has started to increase, with some CIAB respondents even noting instances of carriers “calling to look for risks.” There have also been more options for insureds than in quarters past when procuring Umbrella/Excess coverages

While these are encouraging signs of stability, there are still significant challenges facing Umbrella/Excess liability. Certain industry segments still face capacity limitations, and it is still unclear as to whether or not these positive trends are permanent and will continue.

Looking Forward

Looking forward, while it may be disappointing to read about another quarter mired by pricing increases, there are several positive trends providing hope for the market in the new year. While prices are still climbing, the rising rates have slowed for many lines. Carrier’s appetites for writing new risks seem to be improving for lines like Umbrella/Excess Liability lines, while class action suits seem to be coming at a slower pace in 2021 than they were in 2020 for Management Liability lines.

With all of this being said, Cyber Liability lines will be critical to monitor in the coming year. Advanced planning and preparation for renewals is no longer an option but a requirement. As cybercriminals adapt to new forms of attack, so too must businesses in order to protect themselves from falling victim to a costly data breach. 


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