UG Insurance Brokerage Inc Blog
Commercial insurance offers a beacon of hope for the American insurance industry as its prices continue to soar unabated by the economic impact COVID-19 on the economy.
The pricing of American commercial insurance surged by 18% in the second quarter of the year. The US economy is taking a beating from the pandemic as it sweeps across the country. The double-digit growth is a reminder that there are still a handful of bright spots for the US economy.
The soaring prices in the US market can be attributed to the increases in property and directors and officers (D&O) coverages. It was observed that some D&O markets got large increases. On average, US public company D&O prices recorded a whopping increase of 59%, with at least 90% of clients recorded growth.
Global Commercial Insurance Prices Also Soared
The pricing increase of commercial insurance was not limited in the US, but it is a global phenomenon. Reports showed that commercial insurance prices around the world also soared for the same period.
Globally, the average pricing of commercial insurance jumped by 19%. It is the eleventh straight quarter that the prices of commercial insurance posted an increase. The price hike was the highest recorded since 2012.
Aside from the US, commercial insurance prices in other regions also grew, with the highest increase recorded in the UK and the Pacific regions. Both pricing of commercial insurance in these regions soared by 31%. The US came in next and followed by Continental Europe with 15%. The main driver of the price hike was the increases in property and D&O coverages.
D&O prices in the US, UK, and Australia soared, with the UK posting an average increase of well over 100%. Meanwhile, Australia's price hike is attributed to the capacity shortage brought by the lack of competition.
Property Insurance as the Main Driver
One of the main drivers in the pricing surge of commercial insurance is property insurance, which also climbed up during the quarter. Similarly, the 14% increase in commercial insurance was highly attributed to the growth of property insurance.
Data showed that global property insurance went up by 19% in the second quarter of 2020. Meanwhile, the global financial and professional lines grew by 37%, and global casualty pricing increased by 7%.
In the US, property pricing is three notches higher than the global average, with 22%. On the other hand, casualty pricing is slightly higher than the global average which was up 8%.
The industry anticipates that the upward trend will persist in the remaining quarters of 2020 as insurance companies work on the claims on property and D&O coverages. It seems that the streak of quarters wherein commercial insurance is posting an increase will remain unbroken in the upcoming months.
At UG Insurance Brokerage Inc., we do our best in making sure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (718) 848-7777 or Click Here to request a free quote.