Drones, the sharing economy and a continued spate of merger and acquisition activity will shape the US casualty insurance market in 2016, according to leading broker
Marsh.
In a series of articles posted to the Marsh website, US Casualty Practice Leader Stephen Kempsey lists 10 trends the broker sees as key in driving the market this year – both in risks faced by businesses and how eventual claims are managed.
These 10 trends include:
1.
Continued market softening
Recent consolidation among commercial property/casualty insurers has not outdone the effect of a softening market, and independent insurance agents can expect widespread decreases among casualty lines in the coming year.
A separate report from rival Willis anticipated a 5% to 10% to flat for umbrella and excess casualty.
2. Increased rates for auto
Widespread losses in the auto insurance sector have meant the line is bucking trends, expected to increase in the coming year. As such, Kempsey anticipates “detailed information about your loss control programs, including telematics and driver training can help you to differentiate your unique risk profile.”
3. Heightened mergers and acquisition activity
Consolidation among US insurance companies continues, with deals between ACE/
Chubb and XL/Catlin changing the marketplace. Marsh believes outside interest, from European and Asian insurance companies, will also gain footholds in the US, driving up mergers and acquisitions in the industry.
4. Big data in underwriting
As insurance companies struggle to gain profit in a softening market, the use of big data in underwriting is expected to grow. Insurers will use data collected through telematics and other programs to make targeted risk selection and pricing decisions.
“Using client-specific data and explaining favorable exposure nuances can best position you to outperform your peers at your next renewal,” Kempsey wrote.
5. Underwriting across products
Along with the incorporation of big data, insurers are anticipated to make underwriting decisions across a variety of product lines, such as primary, excess and international casualty. This way, carriers expect to offer their clients more favorable pricing and complete coverage absent of gaps.
6. The sharing economy strengthens
The advent of businesses like Uber or Airbnb has created a variety of insurance questions, but also opportunities for carriers to craft dynamic new policies. While many have taken this mantle upon themselves, there are further issues to explore: are individuals receiving compensation from these companies employees or freelance contractors?
Marsh expects courts across the country to take up this question in 2016, and the answer could have implications for insurance carriers, agents and policyholders.
7. Increased litigation involving injuries
Litigation is also expected to be heavy in the auto insurance and labor law sectors, which have traditionally been lucrative for both attorneys and clients. This year, lawsuits related to traumatic brain injuries, police brutality and post-traumatic stress disorder are anticipated to flood courts and perhaps lead to changes in underwriting and policy terms in some industries.
8. Wearables in the workplace
New wearable devices are increasingly able to track movements of employees in the workplace, ultimately leading to safer workplaces and lower workers’ compensation costs.
Marsh expects an increased number of companies to adopt this technology in 2016, as well as new approaches like telemedicine and telehealth. This may lead to better claims outcomes and reduced medical expenses.
9. Heightened claims investigation
Insurance and workers’ compensation fraud may be curbed in 2016 and beyond, thanks to increased insurer access to social media and other consumer information. Policyholders are increasingly prone to sharing personal photos, videos and content online, which claims investigators can access in order to root out fraud.
10. Drones and other machines
Commercial drone use is growing and is likely to become an issue for insureds. Kempsey sees one of the biggest issues in this space being the question of whether a drone-related injury should be covered under general liability, aviation or other insurance policies.
“That question could be answered in 2016,” he said.
