CIAB reports average rise of 10.7% in Q4 commercial insurance

By Zainab Iwayemi

The Council of Insurance Agents & Brokers in its fourth-quarter commercial market survey has reported a price increase by average of 10.7 percent, across all-sized accounts, compared with 11.7 percent in the third quarter of 2020.

Commercial insurance protects businesses alongside their employees from financial loss in the event of a risk covered by the company’s insurance policy. It provides cover to properties of businesses such as buildings, land and equipment, from fire, vandalism, theft and natural disaster.

The fourth quarter report represents the thirteenth consecutive quarter with increased prices as well as the third consecutive quarter in which premiums increased for all lines as big accounts saw the largest rise at 13.7 percent, while medium and small accounts followed at 11.7 percent and 6.7 percent.

The report shows that umbrella coverage had the largest premium by line of business as it increased at 21.3 percent, this was followed by directors and officers’ liability coverage at 14.7 percent, and commercial property at 12.9 percent.

Similarly, the report reveals that average premium surge for cyber coverage at 11.1 percent represents the first time that figure broke double digits since the market index began tracking the line. However, some lines saw decline in capacity; while 88 percent of respondents reported a decrease in capacity for umbrella coverage, 78 percent reported for commercial property, and 64 percent for Directors and Officers, D&O, and nearly 50 percent for cyber.

Meanwhile, business interruption claims continued to taper off in fourth quarter 2020, but not to pre-pandemic levels as only 38 percent of respondents accounted for an increase in business interruption claims, compared with 62 percent in third-quarter 2020 and to the record high of 94 percent in the second quarter of 2020. These figures are, however, higher than in the fourth quarter of 2019 – before the pandemic – when only 18 percent of respondents reported rise in business interruption claims.

Ken Crerar, president and CEO of CIAB, said in the report. “Umbrella and D&O liability posed continued challenges due to a reluctance for carriers to write those risks, and new trouble for cyber emerged following a recent uptick in costly ransom ware attacks in 2020,”