While 2017 was mostly a buyers' market for both property &casualty commercial insurance and affiliated lines, rates acrosslines could rise this year due in large part to the industry'sestimated $85 billion to $100 billion in totallosses from Hurricanes Harvey, Irma and Maria, not to mentionwildfires, hail, and tornadoes, according to USI's “2018 Insurance Market Outlook.”

Now that losses and expenses are outpacing premium growthfor many insurers and reinsurers, carriers will likely attempt topush through higher pricing in property and affiliated lines, USIpractice leaders predict.

“The question is: How long will this persist before capitalsitting on the sidelines is deployed to win new business andthereby begin to reduce or stabilize rates?” they write. “And, willthe impact of property losses bleed over to casualty and otherlines of insurance?”

Thin profit margins for many carriers

While industry surplus reached an all-time high in mid-2017,exceeding $700 billion, last year's catastrophic events' effect onearnings — coupled with multiple years of annual ratedecreases — means thin profit margins for many carriers. As aresult, underwriters will seek property rate increases overall andthey will employ more selective underwriting for property-relatedlines, USI practice leaders predict.

Overall, they expect the property market to firm up with respectto pricing, terms and conditions, with renewal rates ranging from flat to increase of20%.

Some markets will attempt to apply rate increases beyond theproperty market and into other lines such as casualty, theypredict.

“Ultimately, we do not expect any dramatic increases in casualtyrates except for guaranteed-cost buyers with poor loss historiesand insureds with medium to large commercial auto fleets,” theywrite. “While we see this persisting into 2018, any serious attemptto raise casualty rates substantially should be offsetquickly.”

For primary casualty, insureds with higher retentions areexpected to see a flat to a 10% decrease in rates. Guaranteed-costbuyers will see rates impacted +5% to -5%.

Lead umbrellas are still competitive, so increasing capacity andstaunch competition should continue in 2018, according to the USIpractice leaders. Expect flat to 5% to 10% pricing decreases, butwith an effort by the market to raise attachment points and reducelimits for auto liability, particularly on tougher auto fleets.Excess liability rates are expected to vary based on the layer,with rates flat to decreasing 10% for mid-limit layers andupper-layer rates leveling out at the current pricing.

The USI practice leaders' 2018 forecast for some of the otherinsurance lines include:

• Workers' comp: Pricing for loss-sensitiveprograms is likely to be flat to down 5% for clients with cleanand/or improving loss experience.

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  Clients with deteriorating loss experience will see a +5% ratefluctuation and may need to adjust retention levels accordingly.Guaranteed-cost programs are expected to experience an estimated-10% to +10% change; exceptions will be for clients with extremelyclean loss experience. Guaranteed-cost pricing will also vary by aclient's specific state payroll distribution due to states'legislative pressure on adequacy of rates.

• International: Primary foreign casualtyguaranteed-cost programs should experience stabilized but moderaterate decreases of 5 percent to 15 percent. Primary foreign propertyprograms should experience stabilized but moderate rate increasesof 2 percent to 8 percent (with the exception of risks exposed incatastrophic zones).

• Environmental: Rates are likely to be fairlystable, but vary by coverage line. For pollution legal liability,USI practice leaders predict 5% increase to 5% decrease; forcontractors' pollution, flat to 10% decrease; and for combinedgeneral liability/pollution, flat to 5% increase.

• Public company directors' & officers'liability: In general, a 5% to 10% decrease in pricingremains achievable for mainstream risks. Markets can be observed tocompete vigorously for favored risks and/or to maintain share onsuch risks. However, while not uniform, there is an emerging marketdiscipline and push back on continued premium softness. In theabsence of significant market volatility, disruption or majortriggering event, it is largely expected that current conditionswill extend through 2018.

• Cyber: USI practice leaders expect marketcapacity to remain stable at $500 million to $600 million as newsyndicates continue to offer capacity at Lloyd's and the Bermudamarket expands its appetite for network security and privacyinsurance. The increased competition will continue to force ratesdown for domestic carriers.

Related: Lessons and consequences of the record-setting 2017hurricane season