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Outside of New York, general liability premium increases stay relatively flat

Big Apple's tough construction rules make coverage tight

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Outside of New York, general liability premium increases stay relatively flat

With the notable exception of New York, prices for general liability insurance renewing at midyear have ranged from flat to an increase of 5%.

Douglas J. O’Brien, New York-based casualty and alternative risk national practice leader at Wells Fargo Insurance Services USA Inc., said most of the brokerage’s clients have renewed their liability coverage at the same rate as last year.

“The year is playing out much as we expected. There’s been a tapering of rate increases,” Mr. O’Brien said. “For general liability in general, we’re seeing flat renewals to an increase of a couple of percentage points. For lead umbrella policies, it’s been flat to 5%, but in a few cases, we’ve seen a reduction due to competition.”

Likewise, Jack Green, New York-based managing principal at Integro Ltd., said flat to mid-single-digit renewals are prevalent this year.

“Overall the market has remained pretty stable,” Mr. Green said. “On your more innocuous classes of business, there is abundant capacity.”

Mr. Green said higher rates were reserved primarily for sectors with a greater perceived risk.

“There are different segments seeing rate increases such as for energy and chemical companies, where insurers are trying to push for 5% or 10% increases,” he said.

Another area that could see greater rate increases is construction liability coverage in New York, Mr. O’Brien said.

“Construction liability in New York City has always been tough, and it’s not getting any easier,” he said.

Shari Natovitz, New York-based senior vice president of risk management at Silverstein Properties Inc., knows this firsthand.

“It’s beyond tight in New York,” Ms. Natovitz said. “There are very few carriers willing to write coverage. There used to be 20 markets for our coverage. We are now down to two or three.”

Mitigating factors such as New York’s scaffolding law, which imposes strict liability on building site owners and general contractors for “elevated” injuries, have pushed rates higher and prompted insurers to alter terms and conditions.

Ms. Natovitz said while a $1 million deductible on construction liability policies once was common, insurers now are asking for deductibles of $1.5 million to $2 million.

“The liability market has been quite reasonable other than in New York,” she said.

While a lack of liability buyer options has affected New York, the opposite is true elsewhere.

For lead umbrella coverage, relatively new entrants such as Berkshire Hathaway Specialty Insurance have added capacity and forced insurers to hold the line on pricing.

“Berkshire Hathaway is keeping the incumbents honest, so we’ve seen flat renewals in the lead umbrella space,” Mr. O’Brien said. Other insurers, such as Allianz S.E., have become more competitive, he said.

Joni Elliott, New York-based practice leader of U.S. liability at Allianz Global Corporate & Specialty, said the insurer streamlined its umbrella form to standardize its offerings and better compete against traditional players such American International Group Inc., Ace Ltd. and Zurich North America. Ace, AIG, Berkshire and Zurich did not respond to requests for comment.

“Our sweet spot is the umbrella layer,” Ms. Elliott said, noting that midyear renewals on the layer on average were flat to a 5% bump. “We can compete effectively for the risks we want to write.”

Insurance buyers also have benefitted from a profusion of insurers offering excess casualty coverage.

“The excess market, both Bermuda and London, and even the onshore markets, are hungry,” Ms. Elliott said. “It’s very competitive.”

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