Reinsurance News

U.S. commercial P&C market competitive and growing in Q1: Lockton

3rd May 2017 - Author: Staff Writer

Commercial U.S. property and casualty (P&C) market conditions are competitive and profitable in 2017’s first quarter, with market growth coming despite low-interest rates and an influx of capital, broker Lockton stated in its April Market Update.

Favorable pricing, coverage terms, and programme structures have created a buyer’s market, and insurers refining products with specialty lines has further spurred the segment’s market expansion, Lockton analysts noted.

Buyers have wisened up to strategic aspects of insurance offers, and have become “intently focused on “how” they buy insurance, looking for the most efficient risk transfer structure.”

“In Property, both ample capacity and a lack of substantial industry-wide losses are keeping markets aggressive, with lower prices and stronger coverage for buyers.”

“Underwriting companies continue to renew their client offerings, focusing on product and industry specialization and deploying capital to support their growth plans. We expect to continue in the same direction, with overall prices, terms, and options bene ting buyers,” said Lockton analysts.

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The commercial casualty segment, however, is highly competitive in workers’ compensation (WC) and primary and excess casualty, with the exception being commercial auto, where, Lockton said, claim frequency and severity are increasing industry loss costs; “Clients continue to experience WC and general liability rate reductions, while lead umbrella and excess liability rates appear to have bottomed out—particularly where high excess layers are already at market minimum pricing thresholds.”

The Lockton report noted workers’ compensation rates had dropped by about 2%, and by 7% for clients that chose to change carrier at renewal in the last quarter, factors which have helped underwriters gain client renewals at modest rate declines, which means firms have been able to avoid using extensive marketing campaigns while competing for renewals.

This U.S. P&C market growth could mean more favourable conditions for reinsurers who are likely to be increasingly drawn on to back up primary insurers as they refine their offerings with specialty commercial P&C products and increase risk transfer efficiency.

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