Pricing adequacy has continued to increase across the US casualty re/insurance market, with some lines undergoing an abrupt shift to a renewed focus on profitability, according to global re/insurance brokerage Lockton.
The umbrella and excess casualty markets in particular have seen a positive turn, Lockton said, with carriers now demanding higher attachment points, reducing capacity, and increasing premiums.
While these actions are affecting the majority of clients, national accounts and clients with substantial fleets are expected to experience the most significant impacts.
Lockton believes there is market consensus that this trend is likely to persist for the next 12-24 months.
Commercial auto also continues to perform extremely well, analysts noted, now totalling 32 straight quarters of rate increases.
In contrast, workers’ compensation remains the only area within casualty where the environment is still largely competitive, with decreasing to flat rates in most cases.
Furthermore, in response to the legal dynamics hindering profitability, casualty carriers are quickly drafting exclusions for a range of exposures that are subject to mass tort litigation.
These include sexual misconduct, opioids, cannabis, traumatic brain injury & chronic traumatic encephalopathy, glyphosate, wildfires, assault and battery, and on-premises violent acts.
Analysts cautioned that these restrictive terms and conditions can have a material impact on the value of coverage beyond the pricing changes imposed at renewals.
In instances where coverage exclusion, structural changes and premium increases are considered insufficient to address underwriting concerns, Lockton has observed a higher volume of nonrenewal positions being taken.