Broker Check

The Insurance Market is Hardening: What Does That Mean For You?

January 08, 2020
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For some time, we have been seeing lower prices and less coverage restrictions. The worldwide Property & Casualty marketplace has been soft for roughly ten years. A recent report by insurance broker USI Insurance Services originally published by Carrier Management magazine shows that compared to mid-2019 updates the forecast for 2020 is for greater increases in premium and more coverage restrictions.

Out of 28 product lines USI found that loss sensitive Workers Compensation rates were forecast lower; seven lines to stay the same; while 20 indicate higher rates for 2020. Some of the details:

  • Property: Depending on loss history, rate increases (previously 10%-40%) will be up to 20% for good loss history, and over 60% for poor loss history. Wildfires in California and Australia are contributing to the increase.
  • General and Products Liability: Some insureds who could previously expect flat rates could see up to 10% increases. In special cases, higher increases and less coverage can happen.
  • Automobile Liability: Insureds with good loss history can expect 10%-15% increases; 15-25% if loss history is poor. 
  • Umbrella and Excess Liability: Previous forecasts of up to 20% increases have gone up to 25% for middle market and up to 30% for larger insureds, with possible reduction in available limits.
  • Directors and Officers Liability: Public companies could see increases of 25-50%, over 100% for "troubled" companies. "Troubles" could include product recalls, executive firing or other reputational and financial issues.
  • Crime: Previously forecast for slight up or down changes now could increase up to 25% due to social engineering claims.
  • Cyber: Increases now up to 10% from previous 5% forecast. Large companies and "challenging classes" such as retail, hospitality, healthcare and financial institutions can expect up to 20% increases and up to 50% higher retentions.

In addition to budgeting for higher premiums, companies should review their risk strategy. Options include retaining more risk (higher deductibles or self-insurance if feasible), individual or group captives, risk transfer through contract or outsourcing. Loss control should be a higher priority. Renewal presentations should stress strong points and what is being done to address weaknesses.  

For more information on the hardening of the Property & Casualty Marketplace and how it may affect your premiums this year, please contact our Property & Casualty expert, Steven Sharkey at stevens@thebeacongrp.com / (484) 684-1101