As 2022 begins, experts at Kemmons Wilson Insurance Group (KWIG) share their insights on the commercial lines, personal lines and employee benefits industries.
Commercial Lines Insurance Outlook
KWIG Vice President of National Program Development Eric Collison articulated that there is a noticeable shift in the wind in favor of commercial lines insurance consumers. Commercial lines consumers, here are a few predictions to be aware of in 2022:
- Commercial insurance rates will moderate downward throughout the year, particularly in property and casualty insurance.
While each line of coverage will vary, Eric is optimistic that pricing for several lines of coverage will stabilize throughout the year. Buyers can improve upon renewal results by meeting with their agent to discuss any improvements, enhancements, exposures and asset values, as well as review implemented loss control measures. For example, buyers may consider creating or updating employee handbooks and/or improving property by replacing a roof, updating wiring, or adding fire suppression. If you haven’t already, ask your agent for loss recommendations specific to your business operations. The Employment Practices Liability (EPL) market is moderating some, but the market remains challenged due to the uncertainty surrounding COVID-19, vaccine mandates, etc. It’s critical that employers review and update employee handbooks to mitigate potential losses.
- Inflation and supply chain issues will likely drive increases in loss costs.
Lack of parts for auto repairs, rising costs of building materials and increased labor costs will continue to drive the cost of losses up. With inflation and persistent supply chain issues on the horizon in 2022, it is vital to review your insurance program with your agent to ensure that you are properly covered. Likewise, the EPL market is moderating some, but remains challenged due to the uncertainty surrounding COVID-19, vaccine mandates, etc. It’s critical that employers review and update employee handbooks to mitigate losses.
- Rate and appetite volatility will likely remain for cyber insurance and umbrella policies.
We’ve warned you before that the cyber insurance renewal process is no joke. This will continue into 2022 as most carriers are mandating Multi Factor Authentication (MFA) to obtain cyber coverage. Similarly, the umbrella market is becoming a challenge for many insureds as carriers adjust their underwriting appetites, reduce capacity, and face rising cost of losses. Work with your insurance agent to begin the renewal process for these policies as early as possible!
Personal Lines Insurance Outlook
KWIG Director of Personal Client Relationships Liz Adams indicated that overall we will likely see several insurance trends from 2021 continue to develop and mature. Here are 4 key trends to note about personal lines insurance in 2022, according to Liz:
- Auto insurance premiums are expected to cost 5 percent more in 2022.
In 2021, car insurance rates rose 12 percent, and the bad news is that they are projected to rise another 5 percent in 2022 – on par with projected inflation, an increase in reckless driving, and a higher fatality rate. The good news is there are ways to reduce your auto policy premium, which brings us to the next point…
- Telematics are rising in popularity with auto insurance consumers.
Telematics programs use connected devices, such as mobile phone apps or a device provided by the insurance carrier that can be installed in your vehicle, to monitor and report detailed driving behavior. Better driver behavior can yield a lower policy premium. TransUnion’s 2022 Insurance Trends and Outlook report found that 32 percent of respondents said they had been presented with this option.
- Ongoing supply chain bottlenecks may impact your homeowner’s insurance.
Last year, the perfect storm of supply chain disruptions, labor shortages and inflations caused a 15-year high in home construction backlog, according to Forbes. These factors coupled with a demand for new homes and renovation projects resulted in spikes in construction costs. Even if you are not planning to renovate or build a home, the increase in construction costs can impact your homeowner’s insurance policy. For instance, if a disaster hits and you have to rebuild or repair your home, you’re on the hook for any amount that’s over your homeowners insurance limit. Do you have enough homeowner’s insurance coverage to cover increased construction costs? It’s a great time to conduct a home inventory and check with your insurance agent. Speaking of natural disasters…
- Expect more extreme weather this year.
Scientists say there’s reason to expect even more threatening extreme weather in 2022. Likewise, there’s a 40 percent chance that the 2022 hurricane season is an above-average season with 13-16 named storms, 6-8 hurricanes, and 2-3 major hurricanes predicted. With these weather predictions, it’s likely that homeowners will see an increase in their insurance premiums. Be proactive and make sure you are covered for storm and water damage that the extreme weathering may cause.
Employee Benefits Outlook
KWIG Director of Employee Benefits Chris Rogers emphasized that as the workplace continues to evolve, employers need to be willing to adapt or they will continue to be under-staffed. For years, employers have had the upper hand, but now that is changing. Employees are in the driver’s seat. Chris shared 5 trends impacting employee benefits in 2022:
- Expect health coverage premiums to increase.
A report published by PWC suggests that healthcare costs will rise by 6.5 percent in 2022 due to higher utilization rates of consumers who put off care during the pandemic and considerable investments in technology by providers. As a result, employers should expect their group health plan premiums to increase in 2022. And, in this tight labor market, it would be wise to absorb most if not all of the health care cost increases.
- Employees will continue to expect flexible work privileges to prioritize their work/life balance.
Flexible and remote work is no longer something for only gig workers or freelancers—many “traditional” employers are offering flexible work privileges to their employees, as well. A study revealed that nearly 40 percent of job candidates worldwide noted schedule flexibility is one of their top three factors in career decisions. Do you want to attract top talent? Offer employees the flexibility they seek.
- Evolving paid leave benefits.
A paid family leave policy could be coming to the U.S. In this plan, all workers would qualify for paid leave as long as they have earned wages within the last six months. We’re also likely to see several employers increase parental leave and postpartum medical leave policies.
- Employers are investing in mental health programs.
Mental health is top of mind for many employers this year. In fact, nine out of ten employers plan to invest more in mental health benefits, such as access to a confidential helpline and free sessions with a qualified therapist, employee assistance programs, wellbeing apps with fitness and self-care, and mental health coaching.
- Employee financial wellness will likely become a priority.
With 69 percent of workers stressed about their finances, employee financial wellness will likely become a priority for employers in 2022. Some financial wellness perks to consider include financial workshops, financial planning partners, tuition fee reimbursements and contributions to employees’ student loan debt.
The bottom line is to attract and retain employees, consider starting with a blank benefits canvas and look at your benefits package with these trends in mind.
Be Protected for the Unexpected
Are you and/or your business prepared for what 2022 may bring? Do you have adequate insurance coverage for the ever-changing world we live in? Contact an expert at Kemmons Wilson Insurance Group to review and discuss your insurance, risk management and employee benefits programs. Whether we’re protecting your business, your employees or your loved ones, we provide you with personalized solutions to the problems you don’t see coming.