While the commercial rate market appears to be stabilizing, WTW business leaders say the market is still far from soft. Leaders in 79 percent of WTW's commercial business lines anticipate continued rate increases, but these are expected to slow significantly.
The cyber market is a standout across the industry, with buyers seeing higher increases than just a few months ago. Rate increases of up to 200 percent are common in the cyber insurance market today, making it a difficult market for commercial buyers to navigate. Factors such as overall claims activity, evolving regulations, and an ever-increasingly complex risk environment are all acting as headwinds to slowing cyber rate increases.
Markets are likely to experience uncertainty and volatility in an increasingly challenging global environment, which includes military conflict in Europe, ongoing supply chain backlogs, accelerating inflation, and a more expensive borrowing landscape as a result of the Federal Reserve's recent rate increase.
"While we continue to see rate increases across most lines of business," said Jon Drummond, senior editor of Insurance Marketplace Realities and head of Broking North America, "the silver lining is that the increases are decelerating and beginning to stabilize."
A confluence of factors suggests that higher interest rates and rising inflation will not be transitory, but will be a permanent feature of our economic environment. Commercial buyers who are proactive in their risk management strategy will be best positioned to absorb the increases, rising interest rates, and unprecedented inflation.