Willis predicts buyer-friendly conditions for commercial coverage marketReprints
Risk managers should experience a generally buyer-friendly market for most lines of commercial insurance coverage for the rest of the year, but cyber coverage shoppers could see significant rate spikes according to a report issued Wednesday by Willis Group Holdings P.L.C.
For example, Willis' “2015 Marketplace Realities Spring Update” predicts commercial property rates to fall by an average of 12.5% to 15% for non-catastrophe-exposed and catastrophe-exposed risks alike, thanks to a “market flush with capacity,” in a statement accompanying release of the report. Capacity is also abundant for commercial casualty insurance, and Willis predicts that pricing on renewals will be flat.
For workers compensation, the pricing environment is unchanged, with a mix of increases and decreases ranging between 5% lower and 5% higher. But California Workers comp rates are expected to climb by 8%, “which is still low by recent historical standards,” notes Willis.
“The most surprising market softening can be seen in Aviation programs, where significant and high-profile catastrophes continue to seize the world's attention,” said Willis. The report notes that capacity remains ample, and despite the high-profile losses, the aviation industry safety record remains good. “These factors have combined to reverse Willis' earlier predictions of sharply increased rates for this sector,” said Willis, adding that it expects rates upon renewals to range between flat and up 10% for the remainder of 2015.
Willis said, however, that cyber insurance remains a challenge. The abundance of cyber breaches has led to a dramatically increasing demand for standalone policies, according to Willis. While Willis predicts increases of up to 10% for most buyers, organizations with point-of-sale exposure could face increases of up to 100% for primary layers.