Most commercial insureds in the U.S. are seeing noticeable premium increases on their policies. Hold on tight – you likely won’t see much let-up in insurers’ drive for increased rates well into next year and possibly beyond. We are experiencing the biggest upward price shift in years.
According to Business Insurance, most underwriters in the market appear to be holding ranks as they say unsustainable claims levels and the low-interest rate environment are driving the need for more premium, lower limits, and narrower coverage.
There were record numbers of catastrophic losses in 2017 and 2018. The 2017 Atlantic hurricane season was one of the costliest on record; with Hurricanes Harvey, Irma and Maria hitting coastal areas hard. The combined losses from these destructive storms totaled more than $200 billion. In 2018, California experienced its most destructive wildfire season ever with insurance claims surpassing $12 billion.
Extreme catastrophic weather and wildfires since 2017 have had a direct impact on commercial property pricing, prompting conditions to harden with sustained escalation in rates. According to Insurance Journal, over and above the company’s baseline property rate pricing predictions, a micro-hard market can be expected to produce increases of 50% to 100% and even up to 400% for challenged occupancies with poor losses and/or risk control deficiencies.
Here’s what you can expect in 2020. According to Insurance Journal, 19 lines of business are expected to see price increases; with property, umbrella, and public company directors and officers (D&O) experiencing the most widespread hikes (20% and higher) and capacity withdrawals.
Joe Peiser, global head of Broking, Willis Towers Watson, said “Buyers should allow plenty of time to work with their advisors, provide robust risk information to potential risk-takers, consider options across the global marketplace and take advantage of analytical tools. They should also continue to invest in risk control measures. The cheapest loss is the one avoided.”
MJ Kelly specializes in Commercial Insurance. Our team of underwriting experts are on top of marketplace trends by geography and line of business and will help you navigate your clients through this trend of rate increases. We have the broad market access to offer your clients the appropriate rates with the appropriate coverage.