Analysts at Credit Suisse have predicted that property and casualty (P&C) insurance pricing is due to enter hard market territory throughout the second half of 2019, with rate increases reaching into the double-digits.
This forecast is more optimistic than the firm’s previous April update, when it forecast that pricing would firm in the mid-single-digit range.
Pricing momentum will be most pronounced on the large-employer end of the marketplace, analysts explained, due to a retraction in capacity from insurers such as QBE, FM Global, and AIG, which control a combined share of approximately 12.5% of the large-employer U.S P&C market.
Other factors include a modest rise in loss-expense inflation within liability (lawsuit) lines, which is geared towards large employers, and a higher modelled property risk outlook in both California and Florida.
Additionally, new interest rates are persisting at levels around 20-50bps below existing insurance portfolio yields, Credit Suisse noted, which knock-on impacts from higher reinsurance costs will also push rates up to a lesser extent.
Back in January, Credit Suisse also predicted that reinsurance pricing would enter double-digit territory by mid-year, underlining the 40% retrocessional pricing increase companies faced after the substantial retro market losses in both 2017 and 2018.