Spring 2021 McGriff Market Update:
Property & Casualty Market Overview
The Primary General Liability market continues to experience tightening, albeit not as drastically as other lines of coverage.
- For accounts with a good loss history, we’re seeing 5%–10% increases as a starting place, especially in the middle market/admitted space.
- Difficult classes are starting to see higher increases and coverage restrictions, including full Assault & Battery and Abuse/Molestation exclusions, among others.
- Many carriers are declining to look at Professional and Healthcare accounts if the insureds have had COVID-19-related deaths or cases in their facilities. We expect an average 25% to 35% increase in the rate and higher deductibles.
- For higher hazard products with clean loss histories, the increase will likely be 10%–20%+. On accounts with losses, +20% is the likely starting point.
- Most carriers are adding Communicable Disease exclusions for GL & Excess, although a few admitted markets may remain silent for certain industries.
The Commercial Automobile market remains very challenging. Rates continue to increase across nearly all industry sectors, particularly those with larger fleets. Those increases are primarily tied to fleet size, scope of operations, perceived strength of risk control measures (or lack thereof) and claims history.
- Overall, 10%–20% rate increases are typical starting points and common among fleets with good experience and fleet safety programs.
- Expect 25%–40%+ increases for fleets with loss frequency and/or severity issues.
- Additionally, clients with poor experience are often urged (or required) to take on larger deductibles.
- Monoline auto markets continue to dwindle, reducing competition further.
- In a continuing trend, umbrella/excess markets are requiring higher liability attachment points of anywhere from $2 million to $5 million depending on the size, type and radius of the fleet.
The underlying reasons for rate increases have not changed and reflect the same elements reported in 2020.
- Capacity management by the market has been a trend over the last 12–18 months with limits becoming compressed. Few markets are offering lead umbrellas over $10 million (unless supported by primary and mostly only for the best risks) and in the case of high hazard, large fleets or losses, leads may be limited to $5 million with only a handful of E&S markets willing to participate.
- Depending on class, risk characteristics, losses, etc., we expect increases in the range of 10%–50%+.
- In the middle market space, +10% is likely the starting point, but standalone umbrellas with low hazard and no losses will likely see increases of 15% to 30%+.
- Increases for high hazard, large fleets, or accounts with losses could be in the 30% to 50%+ range with incumbents.
- Excess layers on large ($100 million to $500 million) towers are seeing significant reduction in capacity, causing more carriers to fill the program and leading to 100%+ increases in some layers with markets pushing minimums per million of limit and layer.
- Coverages such as Assault & Battery and Sexual Abuse/Molestation are difficult to obtain.
With the property market continuing to harden significantly, McGriff teams are working with our clients to navigate the market tumult. Rate increases, limited or loss of capacity in some cases, and more restrictive terms and conditions appear to be the norm.
The hard market was with us even before the pandemic. That reality, combined with continued uncertainty around how COVID-19 claims will ultimately play out, has created a very complex situation. The markets continue to struggle with how to best determine adequate rate levels and how to use capacity.
- Rate increases vary, but property continues to increase by at least 15%–25% for all locations/capacity and coverage limits.
- Accounts with losses are seeing rates climb by 25%+ or higher depending on loss frequency and severity.
- Marine rates are in the 5%–10% range depending on loss history.
- Single carriers with limited CAT exposure and a decent loss history are looking at +10%–20%.
- As the admitted markets tighten their terms, the Excess & Surplus market share is rising.
- On the E&S side, we expect the rate range to start around +15%, but the top end will vary.
- In certain CAT areas, some markets are requiring named storm sub-limits mandated by reinsurers.
- CAT-prone accounts and/or loss-problem accounts might see 30%+ rate increases.
- Certain classes such as forest products and frame habitational are still in disarray and could see rate increases at 30%+ and even much higher.
- We are seeing continued scrutiny related to insurance-to-value reporting (coinsurance issues).
- The overall tightening with terms will continue (Ingress/Egress, Civil and Military Authority limitations, renewal form changes with restrictive wording, and Communicable Disease/Pandemic exclusions in some cases).
- However, the second and third quarters of 2021 may be a bit fractured for certain accounts that over-corrected last year in price, deductible or both.
In a rapidly changing insurance market where rate increases are ubiquitous and capacity is shrinking, Workers’ Compensation continues to be the most competitive casualty line of business, but rates are inching upward.
- Most carriers continue to use Workers’ Compensation as a competitive tool, pairing it with General Liability and Auto in their primary casualty quotes for multi-line deals.
- According to the CIAB fourth-quarter report, “Overall, 37% of respondents noted an increase in Workers' Compensation claims. Multiple respondents attributed this increase to the fact that more people were beginning to return to work in Q4 2020. In California, one respondent said, ‘More COVID-19 outbreaks were triggering California workers’ compensation presumption SB1159,’ resulting in more Workers’ Compensation claims.”
- Carriers continue to work through pandemic impacts, including compensability of claims related to COVID-19, telecommuting/changes in the workforce, and classification changes as employee roles change.
Directors & Officers/EPLI
We expect average rate increases of 15%–25% on clean accounts. The increases will be higher for accounts with losses, financial issues, etc.
The information, analyses, opinions and/or recommendations contained herein relating to the impact or the potential impact of coronavirus/COVID-19 on insurance coverage or any insurance policy is not a legal opinion, warranty or guarantee, and should not be relied upon as such. This communication is intended for informational use only. As insurance agents or brokers, we do not have the authority to render legal advice or to make coverage decisions, and you should submit all claims to your insurance carrier for evaluation. Given the on-going and constantly changing situation with respect to the coronavirus/COVID-19 pandemic, this communication does not necessarily reflect the latest information regarding recently-enacted, pending or proposed legislation or guidance that could override, alter or otherwise affect existing insurance coverage. At your discretion, please consult with an attorney at your own expense for specific advice in this regard.
Insurance products and services offered through McGriff Insurance Services, Inc., a subsidiary of Truist Insurance Holdings, Inc., are not a deposit, not FDIC insured, not guaranteed by a bank, not insured by any federal government agency and may go down in value.
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