Willis Towers Watson’s (WTW) latest rate index found that although commercial property insurance rate increases are slowing down after 2017’s record catastrophe losses, buyers should still be wary of upward pricing pressure for the rest of 2018.
The report, “2018 Insurance Marketplace Realities — Spring Update,” observed that the P&C marketplace overall remains well capitalised, supported by the strong appetite of alternative capital providers. The industry’s ability to recover and recapitalise quickly after last year’s record-breaking catastrophe losses (without widespread hardening or any insurer insolvencies) “demonstrates a new level of resilience,” noted WTW head of broking in North America Joe Peiser.
While the marketplace managed to weather the losses it had suffered last year, most buyers are expected to see their insurance expenses increase in 2018 – but the increases will not be as dramatic as projected last quarter. The report also noted that, among the various insurance lines, there will be a mix of price increases and decreases.
The key price predictions made by WTW are:
- Non-cat risks: –5% to +5%
- Cat-exposed risks: +5% to +15%
- Cat-exposed with losses: +15% to +20%
- General liability: Flat to +4%
- Umbrella: Flat to +4%
- Excess: Flat
- Workers’ compensation: –2% to +2%
- Auto: +5% to +9%
- International: –10% to –5%
- Executive risks
- Directors and officers: –5% to +5%
- Errors and omissions: Flat to +5%
- Employment practices liability: Flat to +5%; +5% to +10% in California; +15% to +30% for media/entertainment:
- Fiduciary: –7.5% to +5%
- –3% to +5% (no claims activity or recent incidents)
- Political risk
- Most risks: –2% to flat
- Tier 1 and non-tier 1: Flat
- All lines Flat to +20%
“Navigating this dynamic marketplace demands a strategic approach, and buyers facing renewals should focus on creating submissions using distinguishing data and narratives to set themselves apart from their peers,” Peiser commented on the projections.