The effects of COVID-19 continue to be felt in many different areas – and the insurance industry is no different. As commercial accounts come up for renewal, many are either seeing their rates increase or are seeing changes in the structure of their coverage. Insurance companies that write predominantly commercial lines are hurting. Many of their clients have filed pandemic-related claims, sought payment deferrals or premium credits because businesses have been so hard hit by the restrictions associated with slowing the spread of the disease.
The two areas most impacted by current conditions are property and director’s & officer’s liability.
Within certain property lines we are seeing renewal premiums increases of up to 3 times. Vacant risk is also a troublesome area due to the sudden increase in number of vacant properties tied to COVID. New vacant risk coverage can be hard to come by and rates are escalating.
Business failures caused by the pandemic are making it very hard for D&O insurers due to heavy losses. In response, clients can expect applications to take more time and require more details including pro-forma budgets and projections, details on banking and debt covenants, expense reductions and government support programs accessed.
We are also seeing insurance companies restructuring their products to exclude higher-risk coverages – leaving clients to purchase separate specialty lines.
What does that mean for commercial clients?
It means that its harder to find insurers willing to take on new risk. It means that those that are willing or have capacity to take on new risk, are looking for more reward (higher premiums). Businesses need to be prepared for rate increases. There are definitely times to shop your insurance around to see if you’re getting the best rates, but with the market as it is, this is not one of those times.