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Member, Beacon International Group, Ltd.
Strong competition among insurers contributed to a general softening of U.S. umbrella and excess liability rates during this year's first quarter, despite ongoing concern among underwriters about large losses in auto, product liability and other areas, said Marsh L.L.C. in a report Tuesday.
According to the report, “Benchmarking Trends: U.S. Umbrella and Excess Liability Rates Soften,” about half of clients renewing their umbrella and excess liability program in the first quarter of 2014 saw rate increases, not a significant change from prior quarters.
However, the number of Marsh clients whose rates decreased has steadily increased to 24% in 2014's first quarter from 16% in 2012's third quarter, according to the report.
The industries most likely to see increases included chemical, energy, life sciences, mining and product manufacturing, the report said. “Underwriters have been concerned about costly losses for companies in these sectors as result of explosions, pollution, and class action product litigation,” said the report.
Results were “generally more positive” for light manufacturing companies, financial institutions, retail and real estate companies, the report said.
On average across all industries, companies purchased $47 million in limits, with companies with $1 billion or more in revenue purchasing $127 million of limits on average, according to the report.
A number of new insurers have entered the umbrella and excess liability insurance market over the past three years, and rather than focusing on achieving rate increases, they are now seeking to retain existing business, it said.
It recommended, however, that despite the generally favorable market conditions, policyholders should continue to differentiate their accounts.
“Insureds that can present more information to underwriters to demonstrate and explain real reductions in exposures typically will be better positioned to secure rate decrease at renewal,” said the report.