Insurance and reinsurance broker Willis Towers Watson has reported that rate increases for commercial property re/insurance are easing after sharp rises in response to 2017’s record-breaking natural catastrophe losses, although it predicts that buyers will continue to face upward pricing pressure over 2018.
In its 2018 Insurance Marketplace Realities report, the UK re/insurance broking and solutions company found that the property and casualty (P&C) marketplace remains well capitalised due to the strong appetite of alternative capital providers.
Joe Peiser, Head of Broking, North America, remarked that the industry is demonstrating new levels of resilience in the aftermath of 2017’s catastrophe losses, swiftly recovering and recapitalising without widespread hardening or re/insurer insolvencies.
Although resilience will benefit buyers in the long term, Willis expects most buyers to see their insurance spending rise throughout 2018, although not as dramatically as was indicated in the last quarter.
Willis found that property prices had been moderated since its November report, with non-catastrophe exposed lines expected to see price fluctuations between -5% and 5%, and catastrophe-exposed lines between 5% and 20%.
Notably, the report did not find property catastrophes to have had a significant impact on casualty rates, with pricing across casualty lines forecast at flat to 4%.
Other markets also saw considerable pricing increases, with Auto Liability forecast to increase between 5% and 9% due to ongoing challenges like loss trends and adverse developments.
Similarly, rates for Health Care Professional Liability are expected to rise between 5% and 20% due to intense upward pressure from more frequent and severe claims, with some carriers even exiting the market due to adverse underwriting performance.
The environmental sector is also experiencing its first hard market in a decade, with increases of up to 20%, while directors and officers liability (D&O) is forecast around 5%, and Cyber rates remain between -3% and 5% as new capacity mitigates the $5 billion costs of 2017’s global ransomware attacks.
Peiser commented on the findings: “Navigating this dynamic marketplace demands a strategic approach, and buyers facing renewals should focus on creating submissions using distinguishing data and narratives to set themselves apart from their peers.”