Commercial property/casualty insurance buyers should see modest improvements in market conditions over the remainder of 2014, though external factors are causing instability in some coverage lines, according to a new report from Willis Group Holdings P.L.C.
In its semiannual “Marketplace Realities” report, published Wednesday, Willis said rates for non-catastrophe-exposed commercial property should fall 10% to 15%, while rates for catastrophe-exposed accounts should see property rate reductions in the 7.5% to 12.5% range.
The broker cited ample capacity, favorable 2013 loss experience, the impact of the capital markets on reinsurance capacity and lower windstorm loss estimates in new catastrophe models as factors contributing to the decline in property insurance rates.
On the casualty side, the Willis report said commercial buyers can expect rates ranging from flat to up 7.5% for primary casualty coverage, umbrella casualty rates ranging from 5% reductions to 5% increases, and excess casualty rates ranging from 7.5% reductions to 3.5% increases.
TRIA uncertainty weighs on workers comp
The Willis report projected workers compensation rates ranging from 5% reductions to 15% increases, with increases in excess of 20% possible in California.
Uncertainty over the renewal of the Terrorism Risk Insurance Program Reauthorization Act — set to expire Dec. 31 — “is creating challenges for risks with concentration exposures in the largest U.S. cities,” Willis said, with some insurers offering only short-term workers compensation policies set to expire at the same time as TRIA at locations with the highest exposures.
Automobile liability buyers will see rates ranging from 2.5% down to up 7.5%, the report said, with rates for directors and officers, employment practices and fiduciary lines all expected to range from flat to 5% higher. Errors and omissions rates were expected to range from flat to 5% down for accounts with good loss experience, with increases of 5% to 20% for programs with poor loss experience.
In the market for cyber risk coverage, Willis expects renewing non-point-of-sale retailers to see rates ranging from down 2% to up 5%. Renewing point-of-sale retailers will see rates ranging from flat to up 10% due to recent retailer data breaches, Willis said. The cyber market remains competitive for first-time cyber insurance buyers, according to the report.
In the employee benefits area, Willis projected rate increases of 5% to 6% for organizations with self-insured plans and increases of 9.5% to 10.5% for insured plans.
The Willis Marketplace Realities report can be found here.