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Member, Beacon International Group, Ltd.
The soft property/casualty insurance market will probably continue into next year, according to a report released Monday by Willis Group Holdings. As a result, Willis advises insurance buyers to take “smart advantage” of market conditions.
In his introduction to the 2011 edition of Marketplace Realities and Risk Management Solutions, Willis Chairman and CEO Joe Plumeri suggests that buyers enhance coverage as much as possible while the market is still soft. “Think about terms and conditions you may want to improve,” he writes. “Think about coverages for emerging risks that may not be protected by conventional property and casualty programs including cyber, environmental, and political risk insurance. Think about your carriers as trading partners, and take a moment to consider their financial stability and longer-term prospects.”
According to the report:
Property: The property market remains soft. Reductions will depend on catastrophe exposure and industry type, but Willis expects rates will fall 15% on average.
Casualty: Reductions ahead will depend on exposure and industry type, but Willis expects most rates will fall from 0%-5%, as there is abundant capacity and appetite for most risks.
Workers' Compensation: The soft workers compensation market is expected to continue into 2011. Payroll is the key driver for workers comp premium and as employment stabilizes so should rates. workers comp combined ratios have reached 110%, however, and several states are filing for rate increases. California, Florida and New York lead the list.
Directors and Officers Liability: The directors & officers liability market continues to be soft, with broader terms available and program rates flat or down as much as 15%. Reductions on the primary layer are harder to negotiate and often available only if the incumbent carrier faces competition, so marketing strategies tend to focus on excess layers.