Help

BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

Firm insurance market expected to last into next year

Reprints
chart

COLORADO SPRINGS, Colorado – The hard commercial insurance market of the past two years may have come off its peaks in many lines, but average rates are still expected to increase for the remainder of 2021 and into 2022, insurer and brokerage executives say.

Continued catastrophe losses will drive further increases for many property insurance policyholders, and, while pressures on liability lines have been alleviated by the closure of courts during the COVID-19 pandemic, rate hikes are still expected for casualty risks.

Estimates of the extent of the rate increases vary, though, with some executives saying averages will likely be in single-digit percentages, while others still see double-digit hikes ahead.

Tough lines, such as cyber liability,  will likely see sharper increases.

The executives were meeting at the Insurance Leadership Forum, sponsored by the Council of Insurance Agents & Brokers and held at The Broadmoor resort in Colorado Springs, Colorado, earlier this month. The event was one of the first major insurance market meetings to return to an in-person format since the beginning of the pandemic last year. Last year’s meeting was held virtually. The number of attendees was notably lower than in 2019, but still, 739 people from brokerages, insurers and related companies attended the meeting.

Insurance price increases have eased and will likely be around 5% going forward, except for problem sectors, such as property catastrophe and commercial auto liability, said Jeff Radke, CEO of Accelerant Ltd., a Bermuda-based insurer that operates through partnerships with managing general agents.

Average rates are not decreasing, though, he said.

“On the liability side, the old years keep getting worse,” Mr. Radke said. “And all the catastrophes are really pushing the property side.” Accelerant, which launched in Europe in 2018 and the United States this year, plans to begin operations in Canada next year, he said.

Rates increased by double-digit percentages in numerous markets over the past couple of years but there is now more variation between sectors, said Tracy Ryan, Boston-based president, global risk solutions North America, at Liberty Mutual Insurance Co.

“There’s not one narrative for this market; there’s a lot of micro markets right now,” she said.

For example, property rates are still increasing, but the rate of increase depends on the catastrophe exposure of the property, Ms. Ryan said.

On average, rates are rising by close to 10%, she said.

Last year commercial property/casualty rates increased by 17% on average and the increase was 14% in the first half of this year, said Kristof Terryn, CEO North America at Zurich Insurance Group Ltd. in Schaumburg, Illinois.

Increases in the frequency and severity of property catastrophe risks and the rise in secondary peril losses, such as wildfires, will likely continue to drive rate hikes, Mr. Terryn said.

In addition, while the rise in the cost of materials may ease as supply chain problems are solved, the increased cost of labor will likely be lasting and will continue to drive up loss costs for insurers, he said.

“The market will stay hard for a while,” Mr. Terryn said.

Rates will continue to increase, especially on tough lines, said Marc Orloff, president-North America field operations for Liberty Mutual’s global risk solutions business in Boston.

“Capacity is still compressed in pockets of the liability market and some financial lines,” he said.

And catastrophe-exposed property business will also see rate increases. “Nobody is seeing relief and rates could be up north of 20% in cat-prone areas, but it depends on the individual risk,” Mr. Orloff said.

While new capacity has entered the market, “it’s not been disruptive, it’s been additive,” he said.

In professional liability, rates are increasing about 5% over 2020 rates, said Robert Gadaleta, head of distribution for Hiscox USA in Atlanta, a unit of Hiscox Ltd.

Health care-related professional liability accounts are seeing larger rate increases, as claims and exposures from COVID-19 rise, he said.

The commercial trucking sector, which has seen significant rate hikes for several years, remains tough, said Jamie Reid, chairman of C3 Risk & Insurance Services, a privately owned broker formed in San Diego in 2017.

Insurers are adjusting underwriting based on individual accounts, and policyholders with “high-performing” accounts can see flat renewals or even some reductions, he said.

Policyholders with average or poor loss records, though, are still seeing increases, Mr. Reid said.

Increasing jury verdicts and a rise in the number of claims derived from sub-haulers used by trucking companies are factors driving the increases, he said.

As the hard market comes off its peak, there is more interest in alternative risk transfer structures in the market, said Bruce Denson Jr., president of Cobbs Allen in Birmingham, Alabama.

Alternative coverages for some D&O and regulatory risks are generating interest, he said.

Cobbs Allen, which established CAC Specialty with the unit’s management in 2019, expects to generate revenue of about $140 million this year from the combined brokerages, up from $89.5 million last year as it continues to expand its operations, Mr. Denson said.

A growing area of business for Liberty Mutual is shared economy risks, including ride-sharing companies, Ms. Ryan said.

The insurer combines teams with personal lines experience and commercial lines experience to handle the business, she said.

“Getting the cars back on the road quickly is critical, and that’s a mindset that our personal lines adjusters have. On the commercial lines side, they understand the large limits,” Ms. Ryan said. “It’s a tough business and you need to understand the exposures.”

Insurers are increasingly using digital platforms to write small commercial business, several executives said.

For example, Hiscox USA writes about 50% of its business digitally and about 85% of that business is written without human intervention, said Kevin Kerridge, White Plains, New York-based CEO of the unit. The digital business is largely for small businesses with less than $5 million in annual revenue, he said.

 

 

 

 

Read Next

  • Price hikes for most commercial lines ease in Q2: Willis

    U.S. commercial insurance price increases continued to ease in the second quarter of 2021, though nearly all lines reported significant increases, Willis Towers Watson PLC said in its commercial lines insurance pricing survey released Monday.