When we look at business lines, we see a similar picture. Some lines of business, such as flood, medical malpractice, and surety bonds, showed signs of pricing moderation, while others, such as cyber and umbrella, continued to face upward pressure on premiums, albeit not as sharply as in previous quarters. Workers compensation premiums continued to fall in Q2 2022, with an average decrease of -1.2%, making workers comp the only line to fall.
According to respondents, the lines most affected by recent inflationary trends were commercial property and commercial auto. Inflation affected property values, building material costs, and the cost of auto parts, among other things, driving up premiums for commercial property and commercial auto as carriers adjusted for the increased costs. Inflation also increased claims costs due to higher loss costs and administrative costs associated with filing claims. These factors pushed up prices, particularly for commercial vehicles and commercial real estate. Despite the difficulties in some lines, some respondents emphasized that the difficult economy provided an opportunity for brokers to demonstrate their value as trusted advisors. According to one respondent from a midsize Northeastern firm, "this market has caused many policies to have several limitations and exclusions that allow the commercial broker to prove their value" through "detailed analysis of all insurance options."
While cyber premium pricing has increased by 26.8% in Q2 2022 compared to 27.5% in Q1 and 34.3% in Q4 2021, the line has remained a struggle for brokers. Respondents mentioned tightening limits, capacity issues, and higher deductibles, all of which were seen in Q1. Respondents also stated that, while underwriters were more lenient in other lines, they were "still requiring extensive risk management controls" and asking "lots of additional underwriting questions" for cyber insurance.
When asked about future opportunities for brokers, 81% said "recruiting and developing talent" was their top priority. Another major focus for respondents was utilizing technology and assisting clients in navigating the difficult economy. Respondents saw a need for "emerging new technology platforms to improve efficiency and provide better data analytics," as well as "bringing easier data gathering techniques to clients to make their renewal process more streamlined."