DESPITE THE ongoing COVID-19 pandemic, commercial insurance rates are continuing to move higher across the board, with the exception of workers’ compensation.

A new report by online insurance exchange MarketScout found that in the third quarter of the year the highest rate increases were in liability lines, but property insurance rates climbed too.

AVERAGE PRICE INCREASES

  • Directors and officers Insurance: 11.5%
  • Excess liability insurance (umbrella): 8.5%
  • Commercial auto insurance: 8%
  • Professional liability insurance 7.5%
  • Commercial property insurance: 7%
  • Workers’ compensation insurance: 0.5%

Source: MarketScout Third Quarter Report

Below we’ll look at what’s driving rate increases in individual
lines of insurance.

Directors & officers liability

Increased litigation and hefty court judgments against the top brass at businesses around the country have resulted in substantial payouts by insurers, resulting in higher rates.

Insurers are also writing fewer policies, which in turn feeds into higher rates as the supply diminishes.

General liability and umbrella

Rates for these coverages continue climbing due to a number of factors, including large judgments, the cost of litigation and a rising tide of lawsuits against businesses.

Another factor that could affect future rates is the liability effects of the COVID-19 pandemic and if businesses will see a new groundswell of lawsuits for failing to adequately follow and communicate public health guidelines. As a result, some insurers have started including communicable disease exclusions in their liability policies.

In addition, insurance companies have scaled back on policy limits, according to Arthur J. Gallagher. For example, carriers that have offered $25 million umbrella policies are now limiting them to a maximum of $10 million, or less.

Commercial auto

Rates continue rising in commercial auto, despite a drop in claims due to the pandemic. The increases in commercial auto premiums over the past few years have been due to an increase in distracted-driving accidents and deaths, escalating medical costs and climbing repair costs.

Property

Property insurance rate inflation is largely due to the increasing number of natural catastrophes occurring throughout the country.

Hurricane activity and intensity continues to grow, as does the frequency and destruction of wildfires, tornados and flooding.

In response, commercial property insurers have been making changes to coverage terms and conditions, increasing deductibles and shrinking policy limits. These moves have been especially pronounced in areas with higher exposure to natural catastrophes.

The takeaway

With markets hardening, now is a good time to double down on your risk management efforts to reduce your exposure however you
can. Depending on the insurance, those efforts will take different forms, such as better protecting your properties against catastrophes or training your driving employees regularly in road safety.

OVERRIDING FACTORS

  • A spike in large weather-related loss events and catastrophes,
  • Historically low interest rates,
  • Industry-wide rapid increases in liability losses, and
  • The global pandemic and resulting economic uncertainty.

    Source: Arthur J. Gallagher

Get a Quote

If you’re looking for a team of specialists who can help your cannabis business navigate state laws and regulations like this, contact Cannabis Connect today for a free quote. 

Our Partnerships