State of the Market Report


The commercial insurance market continued to experience pricing and renewal volatility during the third quarter of 2021, globally and in the United States. As insurance pricing continues to rise and renewal rates fall, insurers anticipate a continued hard market cycle – rate increases, restrictive terms and limited capital.

Q3 2021 saw a 15% increase in global commercial insurance prices, the 16th consecutive quarter of price increases. The United States insurance market experienced pricing increases in property, financial and professional lines, with a 14% composite year-over-year increase. Cyber insurance pricing saw the largest increase of any major insurance product category.

Q3 rate increases across the insurance market can be attributed to several factors, including an unusually low rate of renewal. Insurers’ push for tighter terms and conditions; higher deductibles; and exclusions for cyber threats, communicable diseases and time elements drove down renewal rates.

Emerging environmental risks, including wildfires, convective storms and floods, also increased technical risks for insurers, leading many to increase rates. Rising inflation and the ongoing financial strains of the COVID-19 pandemic also played a role.

Across insurance categories, clients with high-risk exposure experienced significant losses and above average rate increases. Clients with strong risk management practices experienced fewer losses and steadier pricing rates, with a higher rate of plan renewal. Exposure to secondary catastrophe (CAT) perils continues to correlate strongly with pricing increases and a deteriorating market across insurance product categories.

Global Insurance Pricing

Q3 2021 marked the 16th consecutive quarter of price increases in the global commercial insurance markets. Globally, the rate of increase remained steady, with the composite year-over-year increase remaining at 15% across Q2 and Q3. Pricing increases peaked in the fourth quarter of 2020 at 22%.

Globally, pricing increases moderated across several key industries, including property insurance and directors and officers liability (D&O). The highest increases in price rate occurred in financial and professional lines, a continuation of a Q2 2021 trend. Q3 price rate shifts in major insurance product categories were as follows:

  • Property Insurance: 9%
  • Casualty Insurance: 6%
  • Financial and Professional Lines Insurance: 32%

Rising Risk and Declining Renewals Drive Price Growth

The causes of the hard insurance market are multifaceted, and some rate increases can be attributed to the soft pricing and low interest rates of the pre-pandemic 2010s. The clearest driver of increasing prices, however, is the growth of systemic risk across the commercial insurance market.

In Q3 2021, cyber insurance experienced the largest price increase of any major insurance product, with premiums rising 96% in the United States and 73% in the United Kingdom. Insurers reported a dramatic rise in ransomware losses, with damages from cybercrime expected to hit $6 trillion in 2021, a 100% increase since 2015. Globally, cyber pricing saw a 40% rate increase over Q2.

In the property insurance market, the rate of pricing increase continued to moderate, declining for the fourth consecutive quarter. Insurers continue to anticipate a rise in the frequency of catastrophic weather events because of climate change, citing wildfires, convective storms and floods among their chief concerns. Insurers in these markets continued to push for tighter terms and conditions, with some suspending writing new policies and declining to renew existing policies. Toughening underwriting standards drove a decline in renewal rates, a trend that typically corresponds with pricing rate increases in the commercial insurance market.

Insurers reported especially challenging conditions in the casualty and directors and officers liability markets. 2020 saw social inflation precipitate a continued rise in settlements and jury verdicts, making general liability an area of great concern for insurers. Additional concerns around US auto exposure kept price increases steady in the global casualty market. In the directors and officers liability market, low renewal rates in several key industries caused continued growth in pricing. The life science, technology and specialty retail sectors were especially harshly affected.

United States Insurance Pricing

Q3 2021 saw a 14% year-over-year increase in commercial insurance pricing in the United States. This represented a slight rise over Q2, following three consecutive quarters of a declining rate of increase. This marked the 14th consecutive quarter of price increases in the United States’ commercial insurance market.

In the United States, pricing increased across all three major coverage lines. The Untied States’ increases in price rate outpaced global increases in property and casualty insurance but lagged in financial and professional lines. Q3 price rate shifts in major insurance product categories were as follows:

  • Property Insurance: 10%
  • Casualty Insurance: 7%
  • Financial and Professional Lines Insurance: 27%

Technical Risks Inspire Tighter Terms and Conditions

In the United States, property insurance pricing increased by 10%, the 16th consecutive quarter of increase. Price growth was driven by several factors, including a low renewal rate compared to previous quarters. The most significant factor was the steadily rising exposure of insured property to catastrophe-prone areas. Property losses continue to climb with the frequency of catastrophic weather events, many of which insurers attribute to climate change. 2020 set a record for incurred losses for homeowner insurance, with approximately $64 billion in losses. This represents a nearly 100% increase over the last 8 years, with 2013 property insurance losses reaching only $35 billion.

Clients’ growing exposure to secondary catastrophe (CAT) perils – including wildfires, convection storms and floods – led to above average rate increases in property insurance premiums. Rate increases were particularly high for clients with poor risk quality and a record of losses.

The COVID-19 pandemic saw an increase in cybersecurity and business interruption losses, the result of which is increasing stringency from insurers negotiating renewals. Toughening underwriting standards included higher deductibles; cyber and communicable disease exclusions; and time element extensions, all of which increased premiums and reduced renewal rates in the property insurance market.

Historically, competition around workers’ compensation (WC) plans has moderated price increases in the United States’ casualty insurance market. The profitability of WC lines keeps casualty insurance affordable, regardless of emerging risks in general liability (GL) and auto lines. 2020’s unprecedented rise in social inflation, however, drove insurers to increase rates for general liability insurance, a growing area of concern. While casualty insurance rates increased by 6% in Q3 2021, with workers’ compensation excluded, that increase was 11%, reflecting growing risk exposure in general liability and auto lines.

The increase in ransomware claims had a dramatic effect on underwriting scrutiny, with many insurers narrowing coverage for cybersecurity-related losses. These reductions were especially harsh for clients that failed to demonstrate maturity and a commitment to risk management. Concerns around systemic cybersecurity exposures led some insurers to cap deployment on risk at $5 million.

Other affected industries include healthcare, manufacturing, education, energy and public entities, for which many insurers declined to quote risks. By limiting the supply of new policies and renewals, the United States’ commercial insurance market saw financial and professional lines pricing increase by 27% in Q3 2021.


Few industries were more affected by COVID-19 disruptions than commercial trucking and transportation. From driver shortages to increased e-commerce demand, insurance underwriters perceive the transportation industry’s liabilities as continually growing, as reflected in 2020 and 2021’s rate increases.

A 2020 report by the American Transportation Research Institute had nearly 25% of surveyed trucking industry stakeholders cite insurance costs and availability as their number one concern for the future.

Most policyholders saw double digit increases to their rates in 2020, due largely to the increasing cost of trucking accident settlements. Nuclear verdicts against commercial trucking and transportation companies drove insurers to raise primary and excess rates. As a result, many large-fleet companies are buying lower limit coverage.

Increases at renewals are considerably lower for companies with a strong safety culture, favorable loss experience and strict hiring standards. Companies that invested in collision mitigation technology, telematics and driver safety programs saw increases from 5-10%. Companies with negligent risk management practices consistently saw double digit rate increases upon renewal, with some facing price hikes of nearly 75%. Proactive and prudent risk management remains the best tool to avoid exponential increases in the price of coverage.


Manufacturing, like most sectors of the economy, is bearing the brunt of pricing increases in all property and casualty lines. Property insurance rates increased through Q3, as underwriters weighed the risk of extreme weather and secondary catastrophe (CAT) perils. Commercial auto insurance rates increased, too, amid a rising number of distracted driving claims and growing demand pressures on the commercial trucking and transportation industry.

Compared to other sectors of the economy, however, rate increases facing manufacturers have been relatively mild, thanks to price stability and competition in workers’ compensation coverage. Workers’ compensation often makes up 50-60% of manufacturers’ total property/ casualty premiums.

Workers’ compensation represents one of the very few lines of insurance coverage for which net written premiums did not rise in 2020. Workers’ compensation coverage continues to drive competition in the casualty insurance market, keeping pricing growth in that sector relatively stable despite significant pricing increases in general liability and auto lines.

The manufacturing insurance line experiencing concerning pricing pressure is product liability. There is wide variance here, depending on the type of product and service provided, but manufacturers across the market are facing higher premiums on product liability policies.


Non-profits are subject to pricing increases across a range of insurance products. Lines of non-profit insurance coverage experiencing hardening include commercial auto liability, molestation and abuse liability, umbrella and excess liability, directors and officers liability, employment practices liability and more.

Non-profits have been shielded from some hikes in insurance pricing, as underwriters recognize that smaller organizations with a large volunteer presence are likely to price shop for low premiums. Demands on the non-profit insurance sector tend to be lighter than those experienced by other industries.

The largest insurance issue confronting non-profits is supply, as brokers reported difficulty finding commercial insurance companies willing to insure a range of nonprofit businesses.

The need for quality brokerage is especially high for non-profits seeking coverage, as options tend to be severely limited by insurers reluctance to offer quality coverage to non-profit business owners.

Multifamily Rental & Affordable Housing

Multifamily housing providers are experiencing pricing increases across multiple lines of insurance. For general umbrella and excess liability insurance, 60% of multifamily housing providers reported price increases of more than 15%. 10% reported that their premiums doubled or worse.

In 2020, multifamily housing providers with no loss history saw 20-30% rate increases on property insurance, and those with a history of catastrophe loss paid 40-60% more, on average. These pricing increases were especially devastating for coastal property owners, whose exposure to extreme weather is precipitating enormous pricing growth.

Increasing insurance costs on the multifamily housing industry have forced many housing providers to mitigate costs elsewhere. Some of multifamily housing providers’ common responsive actions include decreasing operating expenses and increasing rent. The cost of rising insurance costs, then, are not just impacting housing providers, but renters, too.

Public Entity

Public entities like governments, police departments and public-school districts face unique exposure to social inflation, a phenomenon driving increased settlements, jury verdicts and rising general liability insurance premiums.

Every year, the percentage of public entity insurance claims result in awards over $1 million increases. Facing increased litigation, pressures to reduce costs and balance budgets, social justice demands and inadequate public funding, insurance risks confronting public entities have never been higher.

Underwriters are increasingly scrutinizing coverage options for public entities, narrowing coverage, declining renewals and suspending new policy writing, the consequence of which is reduced coverage options and increasing prices. As concerns about system exposures and risk accumulation increase, this concerning pricing phenomenon is only expected to grow.

Pricing increases at renewal are considerably lower for public entities with a strong safety culture, favorable loss experience, strict hiring standards and a history of legal compliance and public accountability. Poms & Associates’ experts in public entity insurance can provide effective risk management solutions and tailored insurance programs, ensuring institutions’ liabilities are well-covered at an affordable price point.


Emerging technical risks and low renewal rates drove pricing rate increases in the global and United States’ commercial insurance markets. The rise of social inflation settlements and weather-related secondary catastrophe (CAT) perils were especially impactful, leading many insurers to suspend new policy writing. Clients across multiple industries reported increased stringency from insurers in renewal negotiations, with underwriters pushing for tighter terms and conditions; higher deductibles; and exclusions for cyber threats, communicable diseases and time elements. Going forward, insurers anticipate a continued hard market cycle, characterized by rate increases, restrictive terms and limited capital.

Across insurance categories, clients with strong risk management programs and low exposure continued to see favorable renewal rates and opportunities for expanded coverage. Clients with high-risk exposure experienced significant losses and above average rate increases. Efforts to mitigate exposure to secondary catastrophe (CAT) perils correlated strongly with competitive pricing and diverse coverage opportunities.

Q3 2021 developments in the commercial insurance market reaffirmed Poms & Associates’ commitment to effective and efficient risk management. Knowledge and preemptive risk control remain the best insurance solutions, guarding clients from rising premiums, market volatility and emerging technical and social risks. As the preeminent risk management organization in commercial insurance, Poms & Associates’ brokers are equipped to address clients’ specific needs and liabilities, regardless of their loss or coverage history. Amid deteriorating market conditions and rising risk exposure, Poms & Associates’ risk management solutions remain the key to affordable and expansive insurance coverage options.