The continued deterioration of loss development on casualty lines has driven market hardening to a greater degree than was originally projected, according to analysts at specialty insurer AmWINS.
The group’s State of the Market report for Q2 2019 noted that firming has spread out from segments such as New York construction, real estate and transportation into almost all sectors of the casualty space.
“There is a significant restriction on capacity, particularly in problem areas,” said Tom Dillon, executive vice president and national casualty practice leader for AmWINS.
Several carriers have dropped out of problem areas such as New York construction and excess transportation in the past six months, AmWINS observed, with the remaining carriers doing significant retrenching.
The wildfires, which caused billions of dollars in property damage on the West Coast of the U.S last year, have also wreaked havoc on the casualty market for the major utility companies.
“The supply of capacity is stressed; however, demand continues,” says Matt Jarrett, Director, U.S. Casualty at THB, AmWINS’ London broker. “Carriers are increasing their attachment points, and we’ve also seen rates on line approaching 100% on certain risks.”
“Utilities on the West Coast right now is the hardest of hard markets,” he added. “It is very difficult to place that business at this point. However, we have found pockets of capacity at the right price.”
Outside of these problem areas, brokers and buyers can also expect to see carriers shift to a focus on underwriting profitability, AmWINS said.
Additionally, capacity is constricting in excess liability, with major players that previously had been willing to offer $50 to $100 million limits pulling back to $25 or even $10 million limits on individual accounts
“Those types of actions cut into marketplace capacity quickly, and we expect to utilize more carriers to fill out excess towers,” said Dillion.
Despite the challenges, AmWINS anticipates that retailers will be able to capitalise on the 2019 casualty market.
“Even though underwriters are retrenching, they still want and need to write business,” Jarrett explained. “The difference is that they are looking for improved terms on the business at rates where they feel will be profitable.”
“This is the time for brokers to show their expertise,” Dillon added. “It’s not just about saving money any more—it’s about creating value for the client and solving problems.”