As we enter the third quarter of 2021 there remains sufficient capacity in the property market, with availability dependent on risk perception and rate, says Harry Tucker, Amwins’ National Property Practice Leader.
Commenting in a recent Amwins state of the market report, Tucker underlined how E&S carriers have become more willing to entertain flat to 10% rate increases in more desirable classes of business.
However, less desirable classes are still seeing hard market conditions and we are also seeing strong competition in the standard market, with more carriers being afforded opportunities to re-engineer and “de-risk” their books of business, allowing the market to seek out selective growth opportunities.
Carriers, Tucker says, are driven to improve profitability and loss ratio (thus being more aggressive on desirable classes) and the need to write premium to get there.
“The remaining four months of 2021 will be a bellwether for CAT-exposed business. This year has already been very active in climate-driven claims,” added Tucker.
“We saw the unprecedented and unanticipated impact winter storm Uri had on the state of Texas and the Southeast.
“Additionally, 21 named storms are predicted for 2021 – a more than 30% increase over average, along with western wildfires anticipated to burn an unprecedented number of acres – a 140% increase over the 10-year average.
“Despite these and other forces, such as low interest rates and a litigious legal environment in Florida and other states, the E&S market remains responsive – with the E&S Stamping Office reporting a 22% YTD growth in the top E&S states of California and Texas.”
Additionally, Tucker believes we’re seeing the ongoing perception of undervaluation in the property market continue to be exacerbated by the nationwide shortage of building materials and labor.
In turn, this is driving up the cost of construction and creating a potential “gap” between what is reported as replacement value and actual costs.