UK property, casualty rates face further decline: WTW

Rates in UK property and casualty business along with terrorism and political violence are expected to decline further, according to a Willis Towers Watson report.

Providing an overview of key sectors of insurance from transportation, natural resources and financial and executive risks, the report highlights that insurers are seeking to improve the overall quality and risk-adequacy of their portfolio in an environment where rate increases following record losses in 2017 did not materialise as initially expected.

But the report also states that strong industry capitalisation helps contribute to a more measured rating environment for commercial insurance buyers in the UK.

Using data across Willis Towers Watson’s corporate risk & broking lines of business, the report covers various lines of business including marine, motor, cyber and trade and political risk.

According to the predictions, UK casualty, UK property and terrorism and political violence rates are expected to range between flat and -5 percent, according to the UK Marketplace Realities 2018 report.

Clyde Bernstein, head of broking - GB, Willis Towers Watson, said: “Prolonged market softening has taken its toll on industry profitability, however, the industry remains fitter and more resilient than in any previous market-correcting event. The market did not respond with across-the-board increases in rates leading some insurers to make difficult choices over their continued involvement in underperforming lines.”

The operating environment in other lines of business may be more benign. Prices in political risk and credit and marine cargo are expected flat, although marine cargo nat cat may see increases of between 5 percent and 15 percent.

Trade credit may see rates range between flat and +5 percent. Financial & executive risks professional indemnity may see price increases of between 5 and 10 percent while financial institutions may see prices renew “largely flat”.

UK environmental lines are expected to renew flat to 2.5 percent while product recall may see rates rising between 2.5 percent and 7.5 percent.

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