Commercial insurance buyers are facing upward pressure on pricing for most lines of business for the remainder of 2019 as the market turns toward more disciplined underwriting, according to broker Willis Towers Watson (WTW).
The analysis came as part of the firm’s Insurance Marketplace Realities 2019 Spring Update, which serves as a guide of North American insurance buyers preparing for upcoming insurance program renewals.
“For decades, we’ve heard calls for underwriting and pricing discipline from the carrier community, and as we head into the second quarter of 2019, increased discipline in the market is apparent,” said Joe Peiser, Head of Broking, North America at WTW.
“Insurers are taking steps to return to underwriting profitability and we are seeing price firming almost universally,” he added. “While it may be more prominent in some lines of business, the firming trend applies even in more benign areas.”
WTW explained that the shift in insurer attitude would mean tightened pricing and underwriting guidelines will be noticeable across different lines, with supply side pressures also contributing to a more challenging marketplace for the remainder of 2019.
Analysts predict rate easing in only two line of business, while 10 lines have been revised further upwards since WTW last October 2018 report.
Buyers can expect across-the-board increases throughout 2019, WTW said, with non-catastrophe lines forecast at +7.5%, catastrophe lines at +5-10%, and catastrophe lines with losses at +15% or more.
In terms of casualty, the commercial liability marketplace is strained, with deteriorating loss trends impacting underwriting profitability, and umbrella liability in particular experiencing notable disruption, with insurance carriers adjusting their underwriting appetites.
General liability rates are expected to be flat to +4%, while worker’s compensation continues to be an exception, with pricing forecast at -2% to +2%.
WTW also noted that auto liability continues to be unprofitable for personal and commercial insurers, with rate increases predicted at +6-12%, while directors and officers lines have demonstrated effective discipline in the face of profitability challenges and are likely to see flat to +10% rate changes.
Finally, rates are expected to vary for cyber lines based on whether buyers gave addressed vulnerabilities or demonstrated increased levels of security, with pricing forecast at -3% to +5%.
“Insurance buyers should expect their insurance advisor to be disciplined and proactive, assisting with analytics, building relationships and driving the risk differentiation that underwriters seek,” Peiser continued.
“That partnership between the risk manager and the risk adviser has never been more vital for deriving the greatest value in the global insurance marketplace and for helping a risk manager’s organization grow and thrive,” he concluded.