2022 State of the Insurance Market

When faced with the promise of a new year, many people look ahead – leveraging lessons from the prior year to chart a path forward, overcome obstacles, and reach for a new goal. The best in the insurance industry often do the same thing as they examine market conditions and strive to meet client needs in an ever-evolving landscape.



In 2021, the U.S. launched COVID-19 vaccines, which were expected to end the pandemic and ease economic strain. While the pandemic impacts are still resonating worldwide, U.S. economic recovery was strong near the end of 2021 and is expected to continue at a moderate pace in 2022, with U.S. GDP growth forecasted at between 3% and 4%.4 Such economic growth is typically linked to greater demand for insurance products and services.

In addition, the pandemic shined a light on the role insurance plays in absorbing risk in times of crisis by supplying financial relief to individuals, businesses, and governments.3 While not all COVID-19 losses have been tallied, many experts expect the pandemic to become the largest ever loss event in insurance history. Because people and businesses at all levels and from all backgrounds have taken pandemic-related economic hits, it’s anticipated that insurance demand will continue to climb in 2022 as risk awareness grows.2

As demand expands, new markets are entering different lines of business and representing additional capital. Many expect that global premium will shatter the record by mid-2022 as current market conditions point toward positive pricing momentum that will continue across all lines and regions.2,3 This momentum is reinforced by 40 year high levels of economic inflation, ongoing social inflation, and an upward trend of natural catastrophes as insurers adjust their underwriting and pricing to account for these factors.

Research indicates that the global insurance industry will exceed $7 trillion in premium by mid-2022, a new all-time record.3


While more moderate in 2022, most personal and commercial product lines will find this is another year of rising premiums as underwriters work to compensate for losses. Overall, the size of rate increases has decreased since late 2020, and 2022 rate hikes are expected to moderate throughout the year, particularly in the property and casualty sector. New market entrants will increase competition, which may drive rates lower. In fact, some high-quality risks may actually see minor rate decreases by late 2022.2

This year, primary and lead umbrella markets will continue to work together to cover the primary because when the same company holds both and handles incoming claims, excess often performs better. Capacity is available, but pricing will continue to be tough as significant losses emerge out of lighter hazard exposures, illustrating that safe classes are a thing of the past. As losses are pushed higher by social inflation, carriers will continue to spread the risk and take smaller chunks of the tower.

Across all commercial lines, higher hazard risks will continue to see rate increases that exceed the average rate increases in the commercial sector. Wind-Exposed Cat, Heavy Auto Fleets, and distressed healthcare accounts are just a few examples of classes that should expect higher-than-normal rate impact.

The personal lines insurance sector also saw increased challenges in 2021, including an uptick in catastrophes, a return to pre- pandemic auto loss claim frequency, and a jump in loss costs. However, premiums have kept pace, and looking ahead to 2022 the personal lines arena is expected to remain stable.2

Based on a deteriorating loss experience-driven in large part by pandemic-inspired remote work, the cyber insurance market saw substantial rate increases and more narrow terms and conditions in 2021. With 25% renewal rate increases common at the end of the year, cyber rate momentum is expected to continue in 2022, as unfavorable claims experience drives cyber loss ratios higher. However, earned premium growth rooted in recent pricing adjustments should help stabilize 2022 results.2


Multiple factors influence insurance availability and cost, and in 2022 three primary factors will play the biggest role in what is available and how much clients will pay for the coverage:

1. Low-interest rate environment. Interest rates have remained low as governments and companies worked to support ongoing economic recovery from the COVID-19 pandemic. In 2022, it’s anticipated that the Federal Reserve will moderately raise interest rates over the course of 2-3 cycles. Even so, interest will likely remain below historical norms for at least 2022, making the interest rate a continuing factor worth watching. As interest rates see incremental bumps, it’s anticipated that the industry will see falling balance sheet market value but rising investment income.

At the end of 2021, the industry was expected to hold $990B in U.S. capital across commercial and personal product lines, demonstrating the deep strength of the industry and lending support to the fact that this isn’t a supply-driven firming market.6 Unlike prior hard markets, the current one is not driven by insufficient capital (a “balance sheet” hard market), but relatively high and unexpected losses and loss cost trends (an “Income Statement” hard market).

Over more than 35 years, the insurance industry has only made a profit on an underwriting basis in 8 of those years. Over that span, 100% of industry income has been produced by investments. Over the last two years, underwriting income has been consistently at historical lows given the interest rate environment, inspiring carriers to push rate and strained, and investment income reduce line sizes, resulting in 2022’s continuing hard market. In addition, there is no indication on the horizon that investment income will rise substantially or that factors contributing to loss trends will reverse dramatically.

More costly inflation-driven claims across all lines of business, an increase in severe weather patterns, and low-moderate interest rates are primary factors influencing the hard market.

2. Increased frequency and severity of natural catastrophes. Most think of natural disasters as primarily impacting property. In reality, catastrophic weather events affect the entire insurance market, given the growing scale of recent weather events. Over the last five years, trends illustrate that losses are only growing more dire. Second only to hurricane-heavy 2017, 2021 proved to be the 2nd most costly year ever recorded for insurers, due in large part to destructive hurricanes and tornadoes as well as extremely cold weather and flooding across the U.S. Last year alone, insurers paid out $120 billion due to natural disaster damage.5 As markets experience catastrophe fatigue and property reinsurance firms, catastrophe-exposed programs will see significant price increases.

In fact, 2022 is expected to be the 5th consecutive year of higher premium costs, although rate growth should be slower than in 2021. An average hurricane season typically includes 14 named storms and seven hurricanes, with three qualifying as major disasters. Many are wondering if 2022 be an average year for catastrophic losses or results in above-average claims. Analysts currently predict that the 2022 hurricane season has a 40% chance of being above-average with 13-16 named storms and 6-8 hurricanes, with 2-3 classified as major catastrophic events.2

As carriers work to implement and improve modeling technology, non-modeled catastrophes such as wind, wildfire, convective storms, and freezing/ice storms continue to be an unpredictable wild card.

3. Economic & Social Inflation. It should come as no surprise that social inflation remains a significant factor in the hardening market. Rising third-party costs are driving the liability arena, and it isn’t expected to slow down in 2022. As courts reopen and cases begin to work through the system, claims are being heard in a more plaintiff-friendly environment. Umbrella and excess markets have been hit the hardest by skyrocketing judgments, which is why excess premiums have shot up almost 100% in years months. Unfortunately, excess rates will only continue to rise.

Economic inflation has also become an influential element. The U.S. inflation rate reached 7% in December 2021 and 7.5% in January 2022 - the highest levels seen in almost 40 years, driving up the cost of first-party coverage due to rapid increases in demand for goods, materials, and labor. Price hikes in construction materials, rental vehicles, and auto parts are among the primary expenses pushing up insurer loss costs in the new year.1

Economic and social inflation will continue to pressure pricing as carriers consider the reserves needed to pay for future claims. With supply chain issues lingering post-pandemic, labor and material costs have increased year-over-year, and claims are staying open longer as required components, materials, and labor are more costly and difficult to obtain. In addition, medical costs have also seen an uptick as healthcare resources feel the strain of staff and capacity shortages. While it’s anticipated that the risk of rising inflation will remain manageable in 2022, if higher inflation persists, insurance profitability and reserves would likely weaken when it comes to longer-tail segments, including Workers’ Compensation and other liability lines.2

Increased insurance demand is anticipated worldwide, with combined premiums for all lines expected to grow by 3.9% in 2022.1


The insurance broker’s role has evolved in recent years to extend beyond simply brokering transactions to serving as a trusted advisor capable of shaping expectations and educating clients as they navigate the insurance landscape. 2022 will be a tough year in a challenging market requiring agents and brokers to double down on their commitment to doing everything they can to work smarter, find creative solutions, and anticipate client needs.

As numerous wholesalers have consolidated over the last couple of years, so have many retail insurance brokers. Additional consolidation is expected to continue in 2022, as customers seek to work with well-diversified wholesalers capable of offering a one-stop shopping experience. CRC Group is a leading wholesaler capable of meeting client needs for the full range of property and casualty coverages, individual solutions including life, retirement, benefits, and proprietary programs and products covering many industries. Contact your local CRC producer today to discuss how we can help you protect individuals, businesses, and communities through a wide variety of competitive insurance solutions.


  1. 2022 Insurance Industry Outlook, Deloitte Insights, November 17, 2021.
  2. The View for 2022: P/C Insurance Predictions and Trends, Insurance Journal, December 20, 2021.
  3. Global Insurance Industry Could Hit New Record in 2022. Insurance Business America, November 18, 2021.
  4. Will 2022 Be Naughty or Nice for the Economy...Or Both?, U.S. News & World Report, December 23, 2021
  5. Natural Disasters Cost Insurers $120 Billion in 2021, Munich Re Says, Reuters, January 10, 2022.
  6. NAIC data sourced through S&P Global Intelligence; Insurance Information Institution