Insurance Buyers to Benefit From Falling Rates, Says Willis

Decling property rates and easing of upward property rate pressure across multiple product lines should create a favorable year for insurance buyers, writes Willis in its 2014 North American marketplace report.

Willis expects Property rates to fall an average of 10-12 percent for non-catastrophe exposed risks and decrease about 5-10 percent for risks exposed to natural catastrophes, such as hurricanes. The decline is driven by an influx of alternative capital to the insurance industry, especially to the catastrophic property risk segment.

The spring edition of Willis’s Marketplace Realities paper predicted modest increases for both non-catastrophe and catastrophe-exposed accounts. 

“The reaction has not all been positive, to say the least, especially with respect to the new sources of capital,” writes Eric Joost, chief operating officer of Willis North America and senior editor of Marketplace Realities. “From our perspective we see clear benefits to these new vehicles, because our perspective is really that of our clients. For our clients—insurance buyers—the increase in supply of capital makes a more inviting marketplace.” 

Rates are expected to fall across eight lines including property, errors & omissions, aerospace, energy, environmental, marine, surety and trade credit. Willis’s previous report predicted increases for E&O and trade credit insurance. 

Overall, 14 insurance lines are likely to see rate increases. These include casualty insurance lines including workers’ compensation and auto, employee benefits, cyber, executive risks, crime/fidelity, health care professional, construction, kidnap & ransom, political risk and terrorism. Buyers can expect continuing single-digit increases, with higher rate hikes in states such as California, where worker’s comp may be up 20 percent.

Predictions for executive risks vary by line: flat to 5 percent for D&O, and flat to 10 percent for employment practices liability and fiduciary coverage. E&O is generally expected to decrease, except for 5 to 25 percent increases for programs with poor loss experience.

In its spring report, Willis predicted steeper rates in the Employee Benefits space as regulatory changes and employer preoccupation with health care reform increased health care costs. However, the rate predictions have fallen from 8-10 percent increases to 6-7 percent increases for self-insured plans and 8.5-9.5 percent for insured plans.

 

 

About the Author
Anya Khalamayzer, PropertyCasualty360.com

Anya Khalamayzer, PropertyCasualty360.com

Anya Khalamayzer is Assistant Editor of Risk for PropertyCasualty360-National Underwriter. Khalamayzer graduated from CUNY Baruch College after intensive internships with Time Out New York Kids and Crain’s Investment News. Keenly interested in environmental science, music and the arts, her articles have been published in Gotham Gazette, Wonkster blog and Ear to Mind magazine. She can be reached at akhalamayzer@summitpronets.com

Comments

Resource Center

View All »

Increase Sales Conversion with this Complimentary White Paper

This whitepaper will share proven techniques - used by many of the industry's top producers...

D&O Policy Definitions: Don't Overlook These Critical Terms

Unlike other forms of insurance where standard policy language prevails, with D&O policies, even seemingly...

Environmental Risk: Lessons Learned from Willy Wonka and the Chocolate...

Whether it’s a chocolate factory or an industrial wastewater treatment facility, cleanup and impacts to...

More Data, Earlier: The Value of Incorporating Data and Analytics...

Incorporating more data earlier in claims lifecycles can help you reduce severity payments by 25%*...

How Many Of Your Clients Are At Risk Of Flood?

Every home is vulnerable to flooding. Learn four compelling reasons why discussing flood insurance with...

Gauging your Business Intelligence Analytics Capabilities and the Impact of...

Big Data, Data Lakes and Data Swamps, How to gauge your company's Big Data readiness....

Extending Contact Center Capabilities Across the Insurance Enterprise

Today advancements in technology are making a big impact on business and society. To yield...

Drug and Alcohol Testing Requirements

In this two-part series, NBIS Risk Management team will break down the requirements to assist...

Why Cyber Liability is Essential for Human Service Organizations

For traditional low-tech operations, information is often compromised in ways that don't involve technology. Access...

A Solution for Large Commercial Habitational Accounts

6 Reasons to place your LARGE Habitational Accounts with Dauntless.

PropertyCasualty360 Daily eNews

Get P&C insurance news to stay ahead of the competition in one concise format - FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.