Commercial property insurance rate increases are easing off initial spikes following 2017's record natural catastrophe (cat) losses, but commercial insurance buyers still face upward pricing pressure on many lines of business for the remainder of 2018, according to leading global advisory, broking and solutions company
Overall, the property/casualty marketplace remains well capitalized, buoyed by the strong appetite of alternative capital providers. The ability for the industry to recover and recapitalize swiftly following 2017's record natural cat losses -- without widespread hardening or any insurer insolvencies -- demonstrates a new level of resilience, said
While a resilient marketplace is positive news for buyers in the long term, most buyers can expect their insurance spend to rise in 2018, although not as dramatically as some expected last quarter. Dynamics within individual lines of business are nuanced, with many lines experiencing a mix of price increases and price decreases.
Key findings
Property: Buyers may experience rising prices in response to the 2017 cat losses; however, predicted rate increases have moderated since
Casualty: Many thought that the property catastrophes would have a knock-on effect in the casualty market, which has been struggling with profitability issues. However, to date we have not seen a widespread increase in casualty rates, at least not of the magnitude that insurers' rhetoric implied, but certain lines of business remain challenging. Buyers will experience incremental upward pressure on general liability, umbrella and excess liability lines. Our current forecast reflects a slight uptick from the price prediction we offered last fall. Pricing forecast: flat to +4%.
Auto Liability: Ongoing market challenges exist in this space, and two years of steady price increases have not kept pace with loss trends and adverse developments. Rates are expected to rise more steeply, and some buyers may even see double-digit increases. Pricing forecast: +5% to +9%.
Health Care Professional Liability: The marketplace for the long-term care and senior living facilities sectors is growing more complicated. Rising frequency and severity of claims in these sectors is putting tremendous upward pressure on this line of business. Some carriers have exited the market due to adverse underwriting performance. Pricing forecast: +5% to +20%.
Cyber: Global ransomware/extortion claims dominated 2017, and resulting costs are estimated to exceed
The report also points to several lines of business where pricing has changed direction since the previous report was published in November. For directors and officers liability, many buyers will now face increases of up to 5%. The environmental sector is experiencing its first hard market in over a decade. Buyers could face rate increases as high as 20% for site pollution liability coverage.
"Navigating this dynamic marketplace demands a strategic approach, and buyers facing renewals should focus on creating submissions using distinguishing data and narratives to set themselves apart from their peers," said Peiser, noting that
Key price predictions for remainder of 2018
View tables here: https://www.willistowerswatson.com/en/press/2018/04/commercial-property-rate-hikes-ease-insurance-buyers-still-face-upward-pricing-pressure
The Insurance Marketplace Realities series is published in the fall and updated every spring. A digital version of the report can be accessed on the
About
West Virginia Delegation Urges President Trump to Approve Disaster Relief Following February Flooding
Willis Towers Watson Responds to Demand for Bespoke Investment Services With Enhanced Integrated Insurance, Investment Offering
Advisor News
Annuity News
Health/Employee Benefits
Life Insurance