Insurance Marketplace Realities 2019 Spring Update report offers property/casualty analysis and rate forecasts for North American insurance buyers
ARLINGTON, Va., April 25, 2019 (GLOBE NEWSWIRE) -- Commercial insurance buyers are facing upward pressure on pricing for most lines of business for the remainder of 2019, according to leading global advisory, broking and solutions company, Willis Towers Watson’s (NASDAQ: WLTW) Insurance Marketplace Realities 2019 Spring Update. The report serves as a guide for North American insurance buyers preparing for upcoming insurance program renewals.
In his introductory remarks, Joe Peiser, head of Broking, North America, Willis Towers Watson writes: “For decades, we’ve heard calls for underwriting and pricing discipline from the carrier community, and as we head into the second quarter of 2019, increased discipline in the market is apparent. Insurers are taking steps to return to underwriting profitability and we are seeing price firming almost universally. While it may be more prominent in some lines of business, the firming trend applies even in more benign areas.”
This shift in insurer attitude means tightened pricing and underwriting guidelines will be noticeable across different lines. Supply side pressures are also contributing to a more challenging marketplace for the remainder of 2019. Our research shows only two lines of business are predicted to ease, and 10 have been revised further upward since our October 2018 issue.
Property: Property market conditions have recently exhibited a decided firming, and buyers can expect across-the-board increases throughout 2019. Capital remains buoyant and capacity abundant with the exception of accounts with significant cat exposures and/or losses, where deployed capacity has tightened significantly on these renewals. Buyers should also take note of tightened underwriting guidelines that may restrict many coverage terms previously offered. Sub-limits and deductibles are being looked at closely. Because negotiations and proposals are taking additional time, buyers should consult early and often with property advisors. Pricing forecast: non-cat flat to +7.5%, cat +5% to +10%, cat with losses +15% or more.
Casualty:The commercial liability marketplace — including general liability, auto and umbrella — is strained, with deteriorating loss trends impacting underwriter profitability. The umbrella liability marketplace is experiencing notable disruption, with insurance carriers adjusting their underwriting appetites, requiring changes to program structures and pushing rate increases. The use of short-limit lead umbrella policies is becoming more prevalent, with risk managers looking to leverage the global marketplace to generate the necessary capacity for their accounts. The one bright spot continues to be workers compensation, where pricing remains largely favorable for buyers. Pricing forecast for workers compensation: –2% to +2%; general liability: flat to +4%
Auto liability:Auto liability continues to be unprofitable for personal and commercial insurers. Escalating loss costs are driving rate increases for the third consecutive year. Pricing forecast: +6% to +12%
Directors and officers:Few directors and officers (D&O) placements will receive pricing reductions. Increases are more likely, but usually manageable. Leading insurers have demonstrated effective discipline and are more conservatively deploying capacity in the face of profitability challenges. Pricing forecast: flat to +10%
Cyber:Global cyber insurance capacity continues to grow. Most cyber renewals for both primary and excess cover are averaging single-digit increases. Pricing and deductible guidelines have been tightened for companies that have not addressed vulnerabilities, so their increases may be higher. For organizations that can demonstrate increased levels of security and internal policy controls, underwriters have offered decreases. Buyers can also differentiate themselves if they are developing holistic approaches to cyber risk across human capital and technology. Pricing forecast: –3% to +5%
“Insurance buyers should expect their insurance advisor to be disciplined and proactive, assisting with analytics, building relationships and driving the risk differentiation that underwriters seek. That partnership between the risk manager and the risk adviser has never been more vital for deriving the greatest value in the global insurance marketplace and for helping a risk manager’s organization grow and thrive,” concluded Peiser.
Key price predictions for remainder of 2019
|Non-cat risks||Flat to +7.5%|
|Cat-exposed risks||+5% to 10%|
|Cat-exposed with losses||+15% or more|
|General liability||Flat to 4%|
|Excess||Flat to +2%|
|Workers compensation||–2% to +2%|
|Auto||+6% to +12%|
|International||–5% to flat|
|Directors and officers||Flat to +10%|
|Errors and omissions||+5% to +10%|
|Employment practices liability||Flat to +5%|
|Fiduciary||–5% to +5%|
|Cyber||–3% to +5%|
|High-risk countries||+10% to +40%|
|Senior living and long-term care|
|+5% to +30%|
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 Willis Towers Watson website, along with a video message from Joe Peiser.
About Willis Towers Watson
Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has over 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.
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