Premiums Continue to Rise in Commercial Insurance Market

We’ve been covering the ebbs and flows of premium costs in the commercial insurance market on this blog for several quarters now. If you’ve followed that coverage, you know it's been all flow and no ebb for quite some time now.

In Q1 2022, that tide continued to rise as commercial property and casualty premiums increased for the 18th consecutive quarter. According to the latest Commercial Property/Casualty Index from The Council of Insurance Agents & Brokers (CIAB), premiums rose on average by 6.6 percent across coverage lines and account sizes.

The new report highlighted several noteworthy trends in the commercial insurance market:

• Medium-sized accounts experienced the largest increase in Q1. A consistent trend in these reports, medium-sized accounts have experienced the largest premium increases of all account sizes in three of the last five quarters.
• Commercial auto coverage increased by 5.9 percent, continuing a concerning trend of 29 straight quarters of premium increases.
• Umbrella coverages experienced the largest increases, which has been the case since the beginning of 2020.

Typically, we use this opportunity to point out how group captive insurance can help companies avoid the cyclical, volatile nature of the traditional market. While that assessment remains as true today as ever, we’d be remiss if we didn’t elaborate on that point to explain that group captives are much more than a hard market solution.

“We’ve found that our group captive concept works well in either a hard or soft market,” Captive Resources’ CEO Nick Hentges recently told the Captive Insurance Companies Association. “It’s key to remember that a major goal of a group captive is to stabilize costs for its member-owners so they don’t feel the [volatility] — the ups and downs — of the traditional insurance marketplace nearly as much.”

The group captives that work with Captive Resources are owned and controlled by their member companies. The member-owned group captive structure offers companies several ways to counteract the volatility of the traditional commercial insurance market — regardless of how it’s trending — including:

• Customized premiums based on each member company’s loss history and exposure vs. generic industry rates.
• Greater control and oversight over insurance program and claims processes, and an unbundled approach to service, rather than a carrier overseeing all program components.
• Profit potential for member owners, for better-than-expected loss performance, rather than a carrier retaining underwriting profit.

These advantages ring as true during soft markets as they do in the rougher waters of a hard market. While it’s natural for companies to be more open to alternative solutions during a hard market, group captives are worth exploring regardless of market conditions.

Contact us to learn how joining a member-owned group captive can benefit your company.

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