Businesses are facing a new risk landscape shaped by the challenges of the past 15 months as the coronavirus pandemic, catastrophic weather events and other market pressures continue to exacerbate market challenges across all commercial property-casualty lines of business.

Yet, even with such challenges, businesses can take steps to increase profitability, according to USI's 2021 Mid-Year Commercial Property & Casualty Market Outlook report.

The property market remains the largest loss leader for the p-c industry overall, causing insurers to reduce capacity, increase deductibles and change coverage terms, according to the report. Non-catastrophic property line insureds with good loss history expect to see increases of up to 10% year over year, while certain classes of insureds, such as CAT properties with minimal loss history, are forecasted to see increases of up to 15%. Those with poor loss history can expect increases of 20% or more.

Most lines of casualty insurance continue to face the challenges of a hard market with rate increases, capacity reductions and restrictive coverage terms and conditions, the report states. Average rate increases of 15% to 25% are the norm in the umbrella and excess liability market. Insureds in the more hazardous industries or with poor loss history are seeing triple-digit rate increases year over year.

When it comes to casualty, “New market capacity is slowly being introduced, but it will take some time for this capacity to have a beneficial impact on the market in terms of initiating competition and moderating rate increases," said Robert Meyers, senior vice president and p-c leader, USI Insurance Services.

Rates for primary layers of cyber insurance are up 25% to 50%—and that's when insureds have a complete submission, optimal ransomware controls and no material loss events, the report notes. Facing increased underwriter scrutiny, insureds will have no choice but to tighten cyber loss controls and improve their risk profile before insurance companies will even consider providing coverage.

Commercial auto liability coverage continues to see significant increases in rates year over year particularly in those lines with poor loss history—primary auto liability with poor history is seeing rate increases of up to 30%, according to the report. 

The report also found that D&O saw second-quarter premiums increase between 10% to 50% due to the continued economic uncertainty in the wake of the COVID-19 crisis, including potential bankruptcies in industries that are slow to recover.

“The hard market conditions continue to affect p-c business lines," Meyers said. “However, even in a tough market, businesses can take steps to improve their risk profiles, reduce costs and ultimately increase profitability."

Unlike other lines of business, workers compensation appears to be performing well in most U.S. states with rates either decreasing 10% or seeing an increase of up to 5% on average for guaranteed cost workers comp line or remaining flat or increasing by up to 5% for workers comp loss-sensitive programs. During the first quarter of 2021, pandemic-related claim activity and frequency were lower than expected due to more employees working from home, changes in job duties, and furloughs. However, the long-term impact from COVID-19 has yet to be seen in the workers comp segment.

Olivia Overman is IA content editor.