Despite the strong financial performance of the U.S property and casualty (P&C) sector, the market is still in a modest transition as there is a continued increase in the frequency of severe claims and a prolonged period of large weather events, according to re/insurance broker Lockton.
Lockton states that the U.S P&C market had a robust H1 2018, evidenced by net premium growth outpacing gross domestic product (GDP), and first half net income for the industry at its highest level since 2007.
In addition, the P&C insurance industry saw an H1 underwriting gain for the first time since 2015.
Subsequently, the combined ratio for commercial lines improved to 95.4% for H1 2018, meaning insurers collected more in premiums than they paid out for claims and expenses.
Within the P&C marketplace, commercial property experienced premium pricing increases that outpaced most other lines of business.
According to The Council of Insurance Agents & Brokers (CIAB), commercial property had the second highest increase, behind commercial auto, at 2.9% for Q3 2018.
However, Lockton says capacity in the property marketplace remains high, which has helped mitigate some of the price increases and is leading to rate stability for accounts without significant losses. For accounts with loss history, there is account-specific underwriting and a constriction of terms and coverage limits.
Natural disasters, including wildfires, floods, wind and hail, continue to drive carriers to seek higher premiums and wind and hail deductibles in cat-prone areas.
Lockton states this is especially true for places that experienced high catastrophe losses such as the U.S Gulf Coast, Caribbean, Japan and parts of Europe such as Germany and the Netherlands.
Looking ahead to 2019, with healthy competition in the marketplace, property rates will likely remain stable even though there have been industry-wide losses.
