Slowing Commercial Insurance Rate Increases Suggest Return to Normalcy

As commercial insurance rate increases steadily decline, 2022 is beginning to move toward normalcy for the commercial insurance market, according to Willis Towers Watson (WTW).

In its "2022 Insurance Marketplace Realities Report, Spring Update," WTW noted that commercial insurance buyers are still seeing rate increases, though many of those increases are now falling to single digits with some buyers even experiencing flat renewals.

Though commercial insurance rates may be stabilizing, it remains far from a soft market according to WTW. Leaders in 79 percent of WTW's commercial business lines forecast continued rate increases, though those increases are slowing significantly, WTW said.

The cyber insurance market remains particularly challenging, with buyers seeing rate increases continuing to climb. Rate increases as high as 100 percent to 200 percent are commonplace in the current cyber insurance market, WTW said. Factors contributing to the cyber insurance increases include overall claims activity, evolving regulations, and an increasingly complicated risk environment, according to WTW.

The Willis Towers Watson report also suggested that the Russia-Ukraine military conflict, continued supply chain backlogs, accelerating inflation, and a more expensive borrowing landscape will likely produce continued market uncertainty and volatility.

"While we continue to see rate increases across most lines of business, the silver lining is that the increases are decelerating and beginning to stabilize," Jon Drummond, senior editor of WTW's Insurance Marketplace Realities and head of broking North America, said in a statement.