2022 Commercial Insurance Market Outlook 

Updated as of 11/15/2021 

Overall Outlook 

2021 has been another challenging year, with COVID continuing to impact business as well as the addition of server labor shortages and supply chain bottlenecks. These challenges are dramatically impacting small to mid-size companies in the U.S. Many of the continued challenges expose and create new risks in an already challenged world. 

In the commercial insurance industry, market cycles are typically referred to as a “hard” or “soft” market. Hard market cycles result in premium increases, rate hikes, program coverage limitations and capacity limitations — soft markets are the inverse. 

The current market conditions and forecast for 2022 rates are considered “moderately hard” market conditions which indicates some progress from 2021 which was widely considered a “firmly hard” market. 

Hard market conditions carried over from 2020 to 2021 include impact from the COVID-19 crisis, social inflation, climate change, and lack of new capital entering the insurance market. 

Detailed and in depth underwriting of accounts continues to mount and the requirement of implemented risk prevention strategies have moved from a “nice to have” to a “must have” across all lines of coverage. 

Outlook by Line of Coverage: Property 

Commercial property insurance continues the uphill battle against unpredictable claims often due to uncontrollable weather conditions. Increased premiums and deductibles along with coverage reductions and limitations are common. Also, risk prevention strategies that once were suggested by carriers to control risk have evolved to mandated investments for insureds. 

Premium forecasts:

Accounts without catastrophic exposure 5-10% increase 
Accounts with catastrophic exposure 10-15% increase 
Accounts with catastrophic exposure AND claims 20% or more increase 

Note that catastrophic exposure primarily relates to weather events such as wind storm, hurricane, earthquake and flood but can also apply to the operation of the property and its contribution to a catastrophic loss. Regions of concern include coastal Florida, North Carolina, South Carolina, Georgia, California and Texas. Also, Oklahoma, Kansas and Missouri for hail and tornado. 

Outlook by Line of Coverage: Casualty 

Social inflation continues to drive up premiums, create a selective underwriting environment and force restrictive coverage terms and conditions. The term social inflation was introduced to the industry in the past few years and is used to describe the rising costs of insurance claims resulting from increased legal advertising, expansion of the litigation finance sector, broader definitions of liability, more plaintiff-friendly legal decisions, and larger compensatory jury awards. 

In 2021, we saw workers’ compensation remain competitive and general liability stabilize while professional (errors and omissions), directors and officers, employment practices liability and cyber liability become more severely impacted. Companies buying these lines of coverage underwent in depth underwriting, increased pricing and often coverage restrictions on the renewal policies. Essentially, there were many more hoops to jump through to qualify for what was more basic coverage historically. 

Premium forecasts:

General liability 10-20% 
Umbrella 15-25% 
Workers compensation 0-2% 
Auto 5-10% 
International Executive Risks 0-2% 
Directors and officers private/not-for-profit (overall) 10-60% 
Professional liability (errors and omissions) 15-60% 
Employment practices liability 10-50% 
Fiduciary 5-25% 
Cyber 25-50% 

The BakerHopp Strategy 

As your advisors of insurance and risk management, we are proactively prepared to work with you through any and all market adjustments. At BakerHopp Insurance Group, our core purpose is to contribute to the success of others—particularly our clients. We understand that our role in your success is to provide transparent and competitive options with detailed information on changes in coverage and pricing so you can make informed business decisions. Our model of service below is the cornerstone of our capabilities: 

1. Discussing with you well in advance of the renewal expectations and strategy. 

2. Leveraging our wide reaching relationships in the insurance industry to obtain the most complete and competitive options. 

3. Providing in depth and easy to understand analysis of options at renewal so you can make confident business decisions.