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 »

Contractors General Liability Coverage 102

What is a prior work exclusion? Which option is right for my client? Why do...

Sign up today to get a 50% matching credit -...

Insurance marketing sometimes seems like it's a game of swings and misses, but we're here...

Guide: 5 Steps to Selling Cyber

Cyber risk and data security is on the agenda of every business owner and executive....

Citation Correlation

Do rigger and signalperson qualifications correlate with the cause of crane and rigging accidents? ...

Complete Guide to Electronic Signatures in Property & Casualty Insurance...

In property and casualty insurance, closing new business quickly is key. Learn how to leverage...

INSTANT ACCESS: Complimentary Sales Closer Questionnaires

Help property owners or managers compare your commercial residential property insurance coverage vs. the competition....

Determining Vacant Property Perils and Valuations

Are your clients fully covered for Vacant Properties? In this economic climate, your insureds may...

Risk Management for Law Firms

This package of 3 concise risk management articles offers straightforward content and practical suggestions law...

Guide: Top 15 E&O Risks-And How To Avoid Them

Accidents happen. But when it's an errors and omissions oversight, that accident can open your...

We'll Show You How to Reach Your Sales Goals

Whether you work alone or have a team of agents working for you, we can...

Agent & Broker Insider eNewsletter

Proven success tips and essential information to help agents and brokers grow their practice – FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.