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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance explores the challenges presented by today's business and economic upheaval, as well as the hardening insurance market, and what it means for the captive insurance industry.

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Commercial Premium Increases Average 11.7 Percent in 3Q: CIAB

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November 19, 2020

Commercial insurance premiums continued to increase in the third quarter of 2020, according to the Council of Insurance Agents & Brokers' (CIAB) quarterly Commercial Property-Casualty Market Index.

Survey respondents reported moderate to significant increases for all account sizes and all commercial lines, including workers compensation, the CIAB said in a statement. The average premium increase for all sized accounts was in double digits once again in the third quarter, up 11.7 percent compared to the previous quarter.

The highest average premium increase was for umbrella at 22.9 percent, up from 20 percent in the second quarter. Directors and officers coverage saw a 16.1 percent increase, followed by commercial property at 14.2 percent. Workers compensation experienced an average increase of 1.5 percent, ending a 21-quarter streak of price decreases.

"It's clear the pandemic has accelerated the market conditions observed in previous quarters," Ken A. Crerar, president and CEO of CIAB, said in the statement. "The financial stress from the extended economic contraction has contributed to increased premium pricing across the board, heightened insurer wariness, and reluctance to take on additional risk."

In terms of underwriting, 90 percent of respondents reported insurance company capacity for umbrella risk decreased in the third quarter. Nearly 80 percent also reported substantial reductions in commercial property capacity, with survey respondents citing a severe natural catastrophe season marked by California wildfires, a tornado outbreak in the Southeast, the August derecho in the Midwest, and several major hurricanes.

In general, the reduction in capacity in the third quarter was coupled with increased deductibles, reduced limits, and increased scrutiny from insurance companies, the CIAB said. Survey respondents described significant loss control requirements in the third quarter and indicated that insurers were asking for detailed financials and business income statements from insureds.

Many respondents also reported additional communicable disease exclusions and increased scrutiny about COVID-19 preparedness, the CIAB said.

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