2021 P&C Market Outlook
Posted May 19, 2021
2020 was a year unlike any other. A pandemic, domestic civil unrest, economic uncertainty, new norms, an election cycle and a multitude of weather and climate disaster events with losses exceeding $1 billion have all changed the way we live, work, conduct business and interact with each other. In short, 2020 was a year of massive upheaval across society.
Like many other sectors of the economy, the commercial insurance industry is experiencing changes to both its market cycles and its operating procedures. In particular, 2020 brought an acceleration of a hardening insurance marketplace—one that is less friendly to insurance buyers—which is now nearly two years old. Capacity has left the market, reinsurance has become more expensive, underwriting has gotten stricter and, most importantly, premiums are on the rise for nearly every line of insurance.
While the effects of this hardening insurance market on your business will depend on a variety of factors, many businesses will see premium increases for their insurance coverage in 2021. In fact, for some lines of insurance, businesses may see double-digit rate increases at their next renewal.
Beyond that, managing a business today is more challenging than ever. Organizations must account for dynamic, short- and long-term trends in their industry, while also addressing trends that affect the economy as a whole. What’s more, all of this is unfolding at a time when the COVID-19 pandemic has upended life and business as we know it.
Throughout the past year, the world has had to navigate a series of lockdowns, surges in COVID-19 cases and frequently changing public health guidelines related to the pandemic. As such, organizations across industry lines have had to make significant adjustments to their daily operations. Between temporary closures, widespread remote work arrangements, mass layoffs and furloughs, updated workplace layouts, reopening plans, and varying state and local restrictions, running a successful business in the midst of the COVID-19 pandemic has been anything but simple. Further, COVID-19 has led to many complications in the insurance market—creating additional exposures across practically every line of coverage, elevating underwriting losses and motivating the development of various policy restrictions. And while the COVID-19 vaccine rollout offers hope for an eventual return to normalcy, much of the ramifications stemming from the pandemic are expected to carry on for years to come.
While this is unwelcome news for many businesses, they are not powerless. Now more than ever, it’s essential for businesses to take a proactive approach when it comes to their risk management efforts and their insurance policies. Put another way, in an insurance and risk environment with many unknowns, businesses should focus on addressing the factors they can influence.
Nevertheless, you are not in this alone. To help you navigate the hardening market, you need an insurance professional who understands your business and its unique risks, and will advocate on your behalf. Secondly, you need insurance professionals who can tell your story to insurance carriers in a way that will best position your business come renewal time. Third, you need to work with an insurance professional who understands the dynamics of the current insurance market cycle and how to navigate businesses through a hard market. Finally, you need an insurance professional who fully understands your industry, the dynamic insurance landscape and how to provide targeted loss control solutions.
Remember, in these challenging times, Horst Insurance is here to provide the insurance guidance and expertise your business needs.