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Commercial Insurance State of the Market: Q3 2022

Written by Adrienne Schickert on

Halfway through Q3 of 2022, it’s clear that clients are facing a variety of challenges in the market, whether due to increasing premiums, a reduction in the maximum amount of liability that an insurer can assume, or a rise in exclusions in coverage. This will likely continue in Q4.

Underwriters are contending with a large volume of submissions thanks to changes in the market, capacity issues, turnover, and customers feeling more empowered than ever to shop around.

Starting the renewal process at least 120 days prior to renewal and offering a complete market submission is vital. To discuss any of these areas or learn about your options, contact the advisors at B. F. Saul Insurance.

Market Trends for Commercial Lines

Cyber Liability

  • Cyber liability insurance premiums have been steadily increasing since Q1 of 2021. In some cases, rates are increasing 100-200%, regardless of loss or change in the client’s business, and we can expect these rates to continue to grow.
  • Increases are due to a spike in loss experience due to ransomware claims and business email compromise, or BEC claims.
      • On average, extortionists obtained ransoms averaging $118,000 per successful breach with an average downtime of 23 days of business interruption losses bringing the average up to $800,000 per incident.
      • Ransomware attacks occurred every 11 seconds in 2021, according to Cybersecurity Ventures. The FBI reported that organizations lost $1.8 billion due to BEC attacks in their 2020 Internet Crime report.
  • Insurers are asking more diligent questions regarding cyber controls/cyber hygiene, and this is the new normal. Factors influencing an underwriter’s unwillingness to offer coverage include the inability to demonstrate proper security measures, lack of preventive security measures, inadequate endpoint security, weak security measures within the supply chain, and poor internal cybersecurity training and awareness.
  • Insurers are requesting the following controls to mitigate exposure:
      • Multifactor Authentication (MFA) for all remote access and admin/privileged controls
      • Endpoint detection and response (EDR)
      • Encrypted and secured backups
      • Privileged access management (PAM)
      • Email filtering and web security
      • Patch management and vulnerability management
      • Incident response planning and testing
      • Phishing testing and cybersecurity awareness training
      • Remote Desktop Protocol (RDP) mitigation
      • Monitoring and logging network protection
      • End-of-life systems replacement or protection
      • Vendor/digital supply chain risk management
  • We believe some insurers will reach their capacity to provide coverage or increase limits prior to year-end. This will negatively impact clients looking to purchase cyber for the first time or to significantly increase their current limits.

Management Liability

  • It’s a challenging market for private companies purchasing Directors & Officers liability (D&O), Employment Practices liability (EPL), and Fiduciary liability, referred to as Management Liability.
  • Pricing and deductible increases are likely to continue.
  • Employment-related exposures drive claims frequency and severity, notably a rise in attention to work misconduct from social movements including #MeToo and Black Lives Matter.
  • Companies that have settled previous D&O claims and those with politicized business lines may see minimum deductibles nearing $1 million.
  • Economic downturn may leave more businesses exposed to a potential breach in fiduciary duty from directors and officers, prompting added financial underwriting scrutiny.


  • We continue to experience a challenging market, with increased premiums and deductibles and a reduction in the scope of coverage.
  • With heightened underwriter scrutiny, clients are under pressure to more reliably report replacement values that reflect the current construction environment. If insurers are not satisfied that reported values are accurate, they may introduce coverage limiting clauses, endorsements, and provisions during renewals with the aim of avoiding bearing risk relating to undervaluation.  
  • Underwriting appetites are changing rapidly for segments of the commercial real estate industry, notably hospitality and storage facilities. This is particularly relevant for clients with policy effective dates during the upcoming hurricane season.
  • Renovations (vs. new construction) of existing properties are up, but underwriting appetites for renovations are scarce. With extensions in renovation timelines caused by factors like economic downturn and lumber shortages, insurers want valuations and cost estimates closer to the renewal dates. In some cases, replacement cost estimates must be dated within 30 days of any changes, requiring clients to manage tighter renewal timelines.


  • Inflation continues to drive up the costs to repair and replace vehicles, while distracted driving and rising medical costs remain concerns.

Workers' Compensation

  • COVID-19 has changed the workforce as more people work from home, reducing opportunities for workplace hazards (although there are now new class codes related to telecommuting). As a result, workers’ comp is one of the few areas in which rates are currently down.
  • However, companies are shifting their policies to get people back into the office while increasing production and travel, which in turn may soon increase the potential for claims.
  • With inflation and payroll increases, the cost to acquire a new employee today is greater than in years past. As this trend continues, it will become more vital for audits to keep up with increased costs.

General Liability and Umbrella/Excess

  • Liability market conditions are more favorable to buyers that have umbrella/excess coverages.
  • There is a renewed focus on the terms and conditions by insurers – notably communicable disease, sexual misconduct, and per-and polyfluoroalkyl substances (PFAS) exclusion, among others.
  • With decreased foot traffic at brick-and-mortar business locations, general liability claims trends have been favorable. The recent return of in-person business exposes more companies to risk.
  • In addition, companies have hired inexperienced workers to replace those participating in “The Great Resignation,” increasing the potential for injury.
  • Third-party liability claims from COVID-19 are starting to decrease but could continue to have an impact on liability coverage in the near- and long-term future, especially as more research about the effects of long COVID is conducted.

Our advisors would love to hear from you. Contact us to learn more about these trends and to learn about risk exposure, mitigation strategies and options for insurance coverage.

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About The Author

Adrienne Schickert is an insurance advisor with over 15 years of experience in the industry. As Vice President and Account Executive in B. F. Saul Insurance’s Commercial Lines practice, she provides clients with guidance on coverage, appropriate limits, risk management, and claims. Adrienne specializes in advising clients with difficult or diverse operations and helping them manage their risk holistically.

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