Commercial Insurance Rates Forecast for 2021

Between natural catastrophes, COVID-19, and other market pressures, the property and casualty insurance industry was tested in extraordinary ways last year. According to a market outlook report in June 2020, the industry was just beginning to see the pandemic’s effects across the market place with rate increases, capacity reduction and tighter underwriting across all lines. And now with 2020 finally behind us, comes with an updated report highlighting the rate changes and trends expecting to impact insureds this year. Although the market has already significantly firmed this past year, continued uncertainty from potential COVID-19 related cases, higher than normal judgements, catastrophe losses, and additional factors have insurers rising rates, lowering capacity, limiting or transferring risk, and taking a harder look at each risk profile. Below are some of the market challenges to expect this upcoming year.


The use of selective capacity by carriers continues to restrict their offerings, especially as it relates to natural catastrophes. Carriers are carefully managing exposures for property clients exposed to hurricanes, wildfires, tornado, and hail events. This strategy has pushed many buyers into shared and layered property policies. These policies tend to be more expensive than the single carrier solutions that were common in the soft market. Carriers are also reporting substantial loss results from communicable disease coverage afforded under 2019-2020 property policies. Event cancellation insurance carriers have also paid large losses related to shutdowns around the world, with many lawsuits still in court and impacting the carrier’s expenses. In an important change, many property policies issues after March 15, 2020, will include an absolute Communicable Disease/Pandemic exclusion.


Rate increases, capacity restrictions, and tighter underwriting standards are commonplace in the casualty market. 2021 will usher in the fourth year of a hard insurance market for Commercial Automobile Liability lines, and the third year of a hard market for General/Products Liability and Umbrella/Excess Liability. The impact of “social inflation,” which includes nuclear verdicts, increased use of expert witnesses by plaintiffs’ bar, and higher settlements and jury awards are resulting in severe claims payouts that are multiples of what they were even five years ago, which is putting significant pressure on rate adequacy. These developments, coupled with the uncertainty that the pandemic will have lasting effects on the industry, will result in this hardening market continuing well into 2021.

Executive and Professional Risk

Premiums are on the rise for public company Directors and Officers Insurance, primarily due to the uncertainties around COVID-19 and increased litigation frequency and settlement payments. While premium increases in the private sector and the not-for-profit D&O market have not been as severe, increases in retention and excess premium are very likely. As instances of network intrusions and ransomware events increase and escalate, the cyber insurance market continues to show trends of hardening. This is primarily being driven by historically low premium rates, spiked levels of ransomware events, and diverse network intrusion attacks across multiple industries. Insurers are struggling to balance increased extortion demand amounts against premiums amounts collected.

Umbrella/Excess Liability

Umbrella & Excess Liability continues to be the most challenging casualty line to place, and it seems that each year it becomes increasingly more difficult to place business into the market. Insurers continue to cite the negative impacts of “social inflation” as the main reason why Umbrella/Excess capacity and rates are being impacted more than any other liability coverage, with a few exceptions.

As we move into the new year, Hawley & Associates will remain close to industry and market developments so we can best guide and support our clients through current and future challenges. We thoroughly understand your operations and can clearly and effectively articulate your needs to insurers. We work by your side to navigate the insurance marketplace and secure the best coverage at a price your organization can afford. Contact us or request a quote from one of our specialized brokers on how we can best protect your mission.