As we move ever so briskly into 2022, we want to keep you in-the-know with the latest market developments this year. Focusing on four of our key insurance solutions—commercial auto insurance, general liability insurance, cyber liability insurance, and workers’ compensation—here we will guide you through some of the market highlights for 2022.
Commercial Auto Insurance Outlook
The commercial auto space has been largely unprofitable for insurance carriers over the past decade. According to a recent report from AM Best, commercial auto underwriters saw more than $22 billion in underwriting losses between 2011 and 2020, despite increasing premiums for 41 consecutive quarters. Litigation, trends, driver shortages, unsafe driving habits, and surging accident expenses have all contributed to these losses.
In 2022, you need to keep an eye on the rise of nuclear verdicts, which are jury awards that exceed $10 million. You should also be aware of driver shortages, distracted driving concerns, and rising accident costs. According to the American Trucking Associations, there is currently a shortage of more than 80,000 drivers.
Data from the National Highway Traffic Safety Administration (NHTSA) indicates that up to 391,000 people are injured every year, and 3,450 people are killed in crashes involving distracted drivers. In addition to the loss of life, these crashes cost an estimated $46 billion each year.
A top culprit of surging accident costs (and commercial auto claims) is worsening crash severity. While fewer drivers were on the road in 2020 due to the COVID pandemic, the NHTSA reported that the fatal crash rate reached its highest point since 2007.
If you are in the commercial auto insurance market, we recommend examining your loss control practices; ensuring you hire qualified and experienced drivers; considering technology solutions where appropriate, such as telematics, to strengthen loss control measures; prioritizing accident prevention initiatives; and, of course, determining whether or not you need to make changes to your commercial auto insurance policies by speaking with your JGS advisor.
General Liability Insurance Outlook
Like commercial auto, the general liability market has consistently underperformed for insurance carriers in recent years. As claims have increased in frequency and severity, insurance carriers have responded by tightening underwriting standards, deploying less capacity, and seeking rate increases. Despite recent trends, carriers have begun to see some improvement in general liability results.
In 2022, watch out for social inflation concerns, which refers to the heightened frequency and severity of insurance claims and surging single-fatality claims. Single-fatality losses have become an increasingly prevalent concern within the liability insurance space over the past decade.
Tips for insurance buyers this year include working with your JGS advisor to educate yourself on key market changes affecting your rates and how to respond using loss control measures; ensuring your establishment has measures in place to reduce the potential for customer or visitor injuries; and examining your general liability coverage with your insurance broker to ensure limits match up with your insurance needs.
Cyber Liability Market Outlook
The cyber insurance market is at a critical juncture for both insurance carriers and policyholders. While the last few years have seen increased competition among cyber insurance carriers, higher capacity and expanded coverage terms—both in 2020 and 2021—saw a rapidly hardening cyber insurance market. Moreover, across industry lines, cyberattacks have surged in both cost and frequency.
This year, keep an eye on tightening underwriting standards, elevated ransomware concerns, and heightened business email compromise (BEC) risks. Ransomware attacks have been steadily increasing in recent years. This increase is likely tied to cybercriminals becoming more sophisticated and developing further avenues for launching these attacks.
To mitigate your risks in this area, you can review your employee handbook and related policies to ensure you have all appropriate policies in place, including language on discrimination, harassment and retaliation. You should also work with your insurance professionals to understand the different types of cyber coverage available; take advantage of loss control services offered by insurance carriers to help strengthen your cyber measures; focus on employee training to prevent cybercrime from affecting your operations; establish an effective, documented, cyber incident response plan to minimize damages amid a cyberattack; and consider supply chain exposures when establishing your organization’s cybersecurity policies.
Workers’ Compensation Insurance Outlook
Unlike other lines of coverage, the market for workers’ compensation insurance has remained stable across most states and industries, performing as an outlier by producing profitable underwriting results.
Trends and developments to look out for in this market are wearable safety technology, telemedicine offerings, qualified worker shortages, and mega claims. A mega claim is an exceptionally large claim, totaling $3 million or more in incurred losses. In the scope of workers’ compensation, these claims typically stem from employees experiencing severe
(and possibly permanent) injuries on the job. The National Council on Compensation Insurance (NCCI) reports that mega claims have reached a 12-year high, increasing in both frequency and severity.
JGS Can Help You Start the Year Strong
With acclaimed insurance and safety solutions and access to resources that help you create a safer space for your vehicles, storefront, networks, and workplace, your JGS team is a team you can count on, always. Contact us today for more information or to review your policies.