Commercial insurance prices moderated across all account sizes with an average increase of 8.3%, but cyber saw a premium hike of 25.5%, according to The Council of Insurance Agents & Brokers’ second-quarter Commercial P/C Market Survey released Tuesday.
Premiums increased for all lines of business for the fifth consecutive quarter, even though prices moderated compared with prior quarters, the Washington-based trade association said.
Cyber’s steep premium increase, up from 18% in the first quarter, was the highest of all lines and surpassed a 17.4% increase for umbrella.
A rise in ransomware attacks, lackluster risk management protocols and lack of employee training were among the primary drivers behind the notable increase in cyber prices, respondents said.
Some 64% of respondents said clients had been reimbursed by insurers for ransom payments after a ransomware attack. “30+ [payouts] in the first half of this year alone,” one broker said in the report.
An increased frequency and severity of claims also contributed to cyber price hikes in recent quarters, which some respondents described as “alarming.”
As well as price increases, insurers are cutting limits and demanding buyers complete additional risk management protocols, the report said. Still, some 95% of respondents said there was an increase in demand for cyber coverage.
“Carriers continued to approach writing cyber risk with caution in Q2 2021,” said Ken A. Crerar, president and CEO of CIAB.
“The rapid increase in ransomware attacks highlighted the need for brokers to work with clients to develop and practice robust risk management strategies to confront the growing threat,” he said.
Capacity for cyber and umbrella lines also contracted, with more than 80% of respondents reporting decreased capacity for cyber, and 73% reporting the same for umbrella, the report said.
Umbrella’s average price increase of 17.4% was down from 19.7% in the first quarter, but the line continues to experience pricing issues in a shrinking marketplace, brokers said.
Aside from cyber and umbrella, directors and officers liability was the only other line that recorded price increases above 10% in the second quarter, at 13.4%.
Medium accounts saw the biggest rise, recording an average increase of 9.4%, while large accounts had an average increase of 9.3%. Small accounts saw a 6.2% increase.
The 8.3% average increase across all size accounts compares with a 10.0% increase in the first quarter and 10.7% in the fourth quarter of 2020, the report said.