Corporate insurance buyers need to enhance coverage as much as possible while the market is still soft, according to a report by Willis Group Holdings.
In introductory comments, Willis Chair and Chief Executive Officer Joe Plumeri suggested to buyers: "Think about terms and conditions you may want to improve."
He also urged them to consider coverages for emerging risks that may not be protected by conventional property and casualty programs, including cyber, environmental and political risk insurance.
"Think about your carriers as trading partners and take a moment to consider their financial stability and longer-term prospects," Mr. Plumeri advised.
The 2011 edition of the Marketplace Realities and Risk Management Solutions annual report offers commentary and analysis on the insurance marketplace in North America for every major line and select industry sectors.
Subtitled "Ongoing Opportunities," Willis said the 2011 report is being published in time to help insurance buyers plan for fall 2010 as well as Jan. 1 renewals.
In his introduction, Mr. Plumeri noted that the absence of "market-turning loss events and ongoing competition for slowly recovering business means the soft market will in most areas go on."
He continued, "Sooner or later, of course, the market will turn, and if history is a guide, the longer and deeper the soft trough in the marketplace cycle, the steeper the upswing on the other side. Taking smart advantage now will help buyers weather that turn."
The report gives the brokerage firm's assessment of market conditions for various insurance lines, including:
o Property insurance, which remains soft, according to Willis.
Reductions will depend on catastrophe exposure and industry type, but Willis expects rates to fall 15 percent on average.
o Casualty insurance, which is going into the ninth year of a soft casualty market.
Reductions will depend on exposure and industry type, but Willis said it expects most rates will fall from 0-5 percent, as there is abundant capacity and appetite for most risks.
o Workers' compensation insurance, where the soft market is expected to continue into 2011.
Payroll is the key driver for workers' comp premium, and as employment stabilizes, so should rates, the report said.
Workers' comp combined ratios have reached 110 percent, however, and several states are filing for rate increases. California, Florida and New York lead the list.
o Directors & officers liability insurance, where the soft market continues with broader terms available and program rates flat or down as much as 15 percent.
Reductions on the primary layer are harder to negotiate and often available only if the incumbent carrier faces competition. So marketing strategies tend to focus on excess layers, Willis said.
? Employee Benefits, where health care reform dominates the landscape.
Many employers expect health care reform to raise costs. The government is steadily releasing guidance to fill in the details of the changes brought by reform.
Meanwhile, interest in wellness programs continues to grow. In addition, although employers better understand the links between good health, employee engagement and increased productivity, most lack the ability to change behaviors.
Commenting on the overall market, Mr. Plumeri concluded that eventually a market-turning new flash–a natural catastrophe, a cyber event, an environmental disaster, or a terrorist attack–will appear. "We accept the fact that most of us will keep this inevitability out of sight and out of mind, and we hope every buyer of insurance will make the most of the opportunities that lie immediately ahead."
In addition to articles on property, casualty, workers' compensation, employee benefits and all executive risk lines, the publication includes market summaries on key specialty lines: aerospace, cyber risks, construction, energy, environmental, health care professional liability, kidnap & ransom, political risk, surety, terrorism, and trade credit insurance.
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