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starting 2022 off right - what to expect for your commercial insurance.

starting 2022 off right – what to expect for your commercial insurance.

The world of insurance has changed quite a bit over the last year. The new reality of insurance established in 2021 will shape the future for 2022. In this video, Rob Cohen, President of benchmark commercial insurance, speaks about what to expect for your commercial insurance in 2022.  

As we look to the next year for updates in the insurance industry, we’re still seeing a few lines of coverage that are being highly underwritten: cyber liability, and directors and officers liability. Over the next year, you can expect 15 to 40% rate increases on those lines. We’re also seeing a few insurance types, like auto insurance, getting flat rates. Let’s dive in a little deeper.

cyber liability

Cyber security is a hot topic for good reason — cyber crimes are at an all-time high and continuing to grow with an increased focus on digital communication. 

Cyber insurance covers the expense incurred due to a data breach, virus, or other cyber-attacks and fraud. It can also cover legal claims that come from a security breach. As companies utilize cloud software, personal computers and laptops, and other technology-based means to store their sensitive data, their risk for a security breach grows exponentially.

The Identity Theft Resource Center claims that in 2018 businesses experienced 571 breaches in security, which exposed 415 million employee and customer records. 

When you do experience a breach as a company, federal law requires you to perform an extensive list of action steps to train and help mitigate future risk. With cyber insurance coverage, however, your carrier will take that responsibility on.

As mentioned above, because of the increased need for cyber insurance, we’re seeing more underwriting, in addition to, increased rates.

directors and officers liability

Directors and Officers (D&O) are defined as, “Insurance coverage intended to protect individuals from personal losses if they are sued as a result of serving as a director or an officer of a business or other type of organization. It can also cover the legal fees and other costs the organization may incur as a result of such a suit.” 

With insurance costs increasing, clients are asking what to expect with D&O coverage. Underwriting is still stressed across all lines of coverage, especially in California. The reason behind the increase in underwriting frequency is a higher sensitivity to the current economic environment, in addition to taking into account additional claims activity. 

Alongside D&O insurance, employment practices liability insurance (EPLI) has also been challenged over the last year. Into the next year, you will likely see higher deductibles and higher premiums associated with EPLI coverage, specifically in California. 

auto premiums

Commercial auto for clean accounts is receiving flat rates, but there may still be a few predicted increases in your auto premium to be aware of. 

In fact, we’ve written an entire article about it! Learn a few reasons why auto insurance premiums are increasing in this blog post. 

auto technology

The rise of technology brings a plethora of pros and cons to the insurance field. As reported by The Centers for Disease Control and Prevention (CDC), there are eight deaths a day due to a distracted driver.

They list the three main types of distraction as:

  • “Visual: taking your eyes off the road
  • Manual: taking your hands off the wheel
  • Cognitive: taking your mind off driving.”

The statistics have shown that distracted driving has increased with the increase in technology in vehicles (think about the 17-inch screen that is now installed in Teslas).

The rise in distractions creates a greater financial risk for insurance companies, hence the rise in auto insurance premiums. Some insurance companies even have a “Distracted Driver Policy” because it has become so common.

driver shortages

They call it ‘The Great Resignation’ for a reason. According to The American Trucking Association, “without substantial action, by 2030 and at current trends, the driver shortage could grow to 160,000.”

What does this mean? The demand for drivers has increased over the last few years as a result of the cultural shift toward delivery and convenience. Nearly “one million new drivers will need to be trained and hired in the next decade to keep pace with increasing consumer demand and an aging workforce.” 

With a shortage of drivers, there is a sense of desperation to find any somewhat-qualified person to help transport supplies. In turn, this has resulted in a higher risk of accidents due to a lack of experienced drivers handling large machinery and vehicles. Which, you guessed it, increases auto insurance premiums.

workers’ compensation 

Workers’ compensation coverage seems to be remaining pretty flat. However, if you have a high X-Mod or you have a consistent loss experience over the last two or three years, you will likely see an increase in rates.  

There are a few things to consider when looking at the future of your workers’ compensation coverage.

covid-19

First and foremost, the effect of COVID-19 on your business. The regulations regarding COVID-19 and other standard health requirements vary from state to state, so it is important to understand what your state requires as far as coverage and claims.

Some states, like New York, will include covid-related claims and provide benefits in workers’ compensation coverage if there is reason to believe the individual was exposed at the workplace. 

remote work environment

The lines have blurred between work and home. Employers have lost some sense of control over their employee’s working conditions. In order for a workers’ compensation claim to hold up, the employee must be able to prove that their injury or illness resulted while performing a task for their company. A greater obligation has been placed on the employer to take extensive measures to make sure the employee’s home-office setup is safe.

rising premiums

We’ll likely see a rise in claims over the next year. Not because there is greater risk in working conditions, simply due to the fact that unemployment was high last year therefore the claims and worker’s compensation benefits decreased. 

Because of the rise in claims and cost of benefits, we’ll likely see a rise in premiums.

a final word

Unfortunately, not a lot of great news in the insurance realm. However, this puts greater pressure on your insurance broker to make sure that they’re turning over every rock to find the best rates and coverage for your unique business. 

Speaking of rates, a lot of our clients wonder whether or not working with a larger brokerage firm influences their rates. Check out Peter Katkov, of benchmark commercial insurance services, speak about the difference between larger and smaller insurance brokerages.