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Pricing for liability cover is stable

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The Jan. 1 liability renewals market appears to be just a bit softer than last year with policyholders generally happy with their treatment as insurers move to secure key renewals, according to sources.

That is, things are little changed from a year ago.

“At Dec. 31, 2014, the industry saw single-digit rate increases,” said David Perez, executive vice president and general manager, national insurance specialty, for Liberty Mutual Insurance Co. in Boston.

“Now, the industry is getting flat to low single-digit increases,” said Mr. Perez. “It's a difference of a few points but nothing significant.”

But not everyone is seeing increases.

“What we're seeing is the market is flat to slightly down,” said Pamela Ferrandino, national casualty practice leader at Willis North America Inc. in New York.

She added that there have not been any great changes in terms and conditions.

For most insurers, “probably around flat is going to be the norm,” for general liability, said Dan Aronson, U.S. primary casualty placement leader at Marsh L.L.C. in New York.

But the stagnant market is welcomed by policyholders.

“We found the market seemed to have adequate capacity and actually very competitive rates compared to what we had seen about three years ago when we last did our marketing,” said Marti Dickman, vice president, risk management, for ADS Waste Holdings Inc., Ponte Vedra, Florida, the fifth largest solid waste company and largest privately owned nonhazardous solid waste management company in the United States.

“We were able to renew with flat retentions and overall found that it was a good renewal process,” said Ms. Dickman, adding “our last renewal process we did not have the same success that we had this year.”

She said this year the company did a complete marketing of its insurance program, as it does every two to three years.

“I was hopeful we would see a turn in the results, but I was more pleased with what we did achieve not just in terms of rates and retentions but also in some of the flexibility in terms and conditions and coverages. Overall, we were very pleased.”

"Rates are becoming more competitive,” said Eric Spalsbury, director of risk management at Stanley Steemer International Inc. in Dublin, Ohio, due to factors including excess capacity and capital.

“That being said, we do expect some premiums to rise as a result of other drivers,” said Mr. Spalsbury. “The recovering economy is resulting in an improving business environment. With an upsurge of business come head count and revenue increases, which are key contributors to the premium equation. This is palatable, as long as profits increase commensurately.”

Verizon Communications Inc. just renewed its financial products coverages and found the market flat to slightly down, said David Cammarata, assistant treasurer in charge of risk management for the telecommunications services company and a Business Insurance 2015 Risk Manager of the Year Honor Roll® member.

“We were able to achieve some relatively moderate improvements in terms and conditions,” said Mr. Cammarata.

“Carriers are becoming much more proactive on their renewals — they're trying to lock them up earlier,” said Mr. Perez. “Incumbents are really trying to maximize their incumbent position more than they have historically.

“You're trying to find out what it will take to renew the account more quickly. It could be terms and conditions, it could be price, it could be on the service side,” said Mr. Perez. “Understanding what the customer wants in order to renew ahead of schedule is a growing trend.”

“Insurers want to hold on to their renewals, so they're going to try to lock up renewals early,” said Mr. Aronson. “So, they're probably going to have to, on a case-by-case basis, give a reduction to prevent a marketing effort.”

He further described the renewals as a buyers' market. “For many insureds, it's not a challenging renewal environment,” said Mr. Aronson.

One hot-button issue in the January renewals cycle is cyber coverage and where it will fit into the liability program.

“It has been a major topic of conversation at most renewals regardless of the exposure,” which can be anywhere — including construction, consumer goods, retail and financial services — said Jessica Cullen, senior vice president for Arthur J. Gallagher & Co. in Itasca, Illinois. “We do find cyber exposures creeping into the general liability world.”

Answers to the question of where general liability cover leaves off and monoline cyber picks up in cases involving bodily injury or property damage are being sought and definitive solutions pursued, she said.

“It's an evolution, and we are definitely seeing a need to manuscript language,” said Ms. Cullen, as the industry works to eliminate coverage gaps with comprehensive, seamless policies

Mr. Aronson sees pricing in lines including workers compensation remaining “a bit down overall” and auto liability pricing “probably is going to be up a little bit,” he said.

According to Willis' casualty market pulse from November 2015, large accounts averaged a 0.5% decline in worker's comp renewal rates through the third quarter 2015 while middle-market accounts were up an average of 0.2%.