With no relief from COVID-19 in sight, the pandemic continues to challenge people and businesses alike. As you will see in the latest edition of our Market Update report (scroll to the end of this post to download your free copy), the insurance marketplace also has not remained untouched. Here are a few highlights.
Employment Practices Liability Exposures Are Increasing
COVID-19 continues to present complex business dilemmas that are of concern to underwriters. Decisions regarding layoffs, remote working, workplace safety, employee benefits and other evolving issues create exposure to discrimination, retaliation, invasion of privacy and other employment-related wrongful acts. Reopening and return-to-work policies also are fraught with similar pitfalls.
Carriers are requiring more detailed underwriting information on the impact of the pandemic and controls in place, with some carriers placing a moratorium on new business. For hard-hit industries, such as hospitality and retail, carriers may require COVID-related exclusions.
Expect the market to continue to harden as insurers react to COVID-19 and wrestle with the existing growing claim activity surrounding equal pay and sexual harassment and privacy.
Property Market Sees Continued Accelerated Rate Increases
Rates continue to increase significantly in this already-hard market, based on exposure, occupancy, loss history and quality of risk, protection and total insurable value. Over the last quarter, double-digit rate increases were experienced for both catastrophic and non-CAT exposure risks. Industry classes with higher hazard exposure experienced even greater rate increases with reduced capacity.
COVID-19 accelerated the rate of increase, due to rising costs for defending and adjusting communicable disease claims; increases to losses in reserve, putting needed capital outside of available markets; and restrictions in travel and site visits that are making loss response and pre-loss inspections more difficult, or even impossible.
Non-renewals are also on the upswing. As carriers are under more pressure to perform, they may provide non-renewal notices for unprofitable accounts, catastrophe exposure, specific industries/appetite change, and lack of attention to loss control recommendations.
Workers’ Compensation Rates Poised for Movement
Workers’ compensation rates have remained stable for some time. In fact, with consistent rate reductions in recent years, the market appears to be bottoming out. The COVID-19 pandemic is likely to cause a significant increase in disease-related claims; it could accelerate firming of the marketplace.
Large-scale layoffs as a result of the pandemic could also greatly impact workers’ comp claim activity, because plant closings and layoffs generally increase claim filings. With an unprecedented increase in unemployment due to the pandemic, the workers’ comp landscape could rapidly deteriorate during 2020.
Some carriers may require a supplemental COVID-19 infection control protocol questionnaire/application while others, looking cautiously at risks with inherent exposure to COVID-19, may decline to quote.
Hylant continuously monitors the pulse of the changing commercial insurance market. As one of the largest privately held brokers, we are dedicated to understanding industry issues and trends and how they could impact business insurance premiums and coverage availability.
If you have questions about your commercial insurance, contact your Hylant service team member. Don’t have one? Contact a local Hylant office.
The above information does not constitute advice. Always contact your insurance broker or trusted adviser for insurance-related questions.
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