Abundant capital in US P&C favours buyers, according to broker Lockton

Despite low interest rates, ample capital from long-term underwriters and growth in new and expanding entrants are keeping property/casualty insurance terms and conditions in the US at very competitive levels, according to a market update by broker Lockton.

“We continue on the path of a marketplace that supports favourable pricing, coverage terms, and program structures that benefit many buyers,” said Debbie Goldstine, Lockton’s excess casualty practice leader.

Commercial casualty insurance remains highly competitive across workers’ compensation and primary and excess casualty, according to the report.The exception is commercial auto, where both claim frequency and severity are increasing industry loss costs. Clients continue to experience workers compensation and general liability rate reductions, while lead umbrella and excess liability rates appear to have bottomed out—particularly where high excess layers are already at market minimum pricing thresholds.

Workers’ compensation rates dropped about 2 percent in the latest quarter, Lockton said in its April report. For clients that changed carrier at renewal, that drop is 7 percent. This is motivating underwriters to secure desired client renewals at modest rate declines and avoid competing in an expansive marketing effort.

The property market sector continues to soften, giving the advantage to the insurance buyer, according to Lockton. Ample capacity and a lack of substantial industrywide losses are keeping markets aggressive and competitive, resulting in lower prices and stronger coverage.

New markets are taking a more aggressive role in underwriting risks. Meanwhile, markets striving to write more business are abandoning outdated practices based on occupation or class of business in favour of high-risk classes of business. The combination of new markets and strong underwriting appetites means even difficult classes of businesses are finding easier access to insurance.

Beyond the standard property coverages, first-party cyber coverage continues to emerge and evolve. More markets are coming to grips with the reality of cyber risk and the importance of providing better coverage with higher limits, and they are facing pressure to remove limiting cyber exclusionary endorsements.

Additional product offerings that provide a host of client solutions include privatization of flood cover, parametric trigger programs, multiyear single limit programs, deductible buyback, active shooter, and political violence terrorism coverage.

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