Property hard market just starting; casualty thorny: Berkley

The insurance rate hardening in US property is just barely getting through the early months of 2023 while casualty and liability lines are diverging into a “mixed bag” of risk versus opportunity, the top dog at insurance group  WR Berkley has argued.

“Clearly the cycle remains alive and well and the emotions that drive the behaviours remain very much intact,” CEO Rob Berkley said of the bird’s eye view of the broad market. But lines “are clearly not in lockstep,” he reiterated of a market trend that “becoming more and more pronounced.”

Property has not fully earned its hard-market wings yet.

The property insurance market is “clearly in what I would suggest is early stages of meaningful firming,” but with “disappointing” momentum still visible in January ahead of “a little bit more momentum” in February, “real progress” in March and “meaningful traction” in April, Berkley told his company’s Q1 earnings call.

That rate momentum YTD in 2023 is “a little bit more pronounced or extreme on the cat side,” but appears to apply to non-cat or standard risk exposures as well, he claimed.

The Berkley view across casualty and liability, in contrast, ranges more broadly from “meaningful opportunity” to “desperate need of some discipline.”

Professional liability lines are a “mixed bag” with WR Berkley “making meaningful hay” in surplus coverage of errors and omissions lines, but avoiding a market “free-fall” in large account D&O, Berkley said. Hospital professional liability “is in desperate need of some discipline.”

Casualty lines still hold “meaningful opportunities,” particularly in E&S lines, but Berkley devoted most of his comment to lines showing increased challenge, including select large account excess lines or excess lines in auto, either from rising competition or inflation concerns. Workers’ comp “bounces along the bottom.”

“I think the industry needs to be very careful in professional casualty. and auto in particular, because they are notably susceptible to social inflation,” Berkley said. “From our perspective, while there are signs that economic inflation is cooling a little bit from the heights it reached, for social inflation there is no sign or indication that we see that calming at all.”

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