Ample capacity and intense competition led to generally stable market conditions outside of property catastrophe. However, challenges are beginning to emerge for insureds in some areas of primary casualty and workers’ compensation.
“This year is on track to be one of the worst years ever for catastrophe losses,” said Dean Klisura, Marsh’s U.S. Risk Practices Leader. “Although the U.S. property insurance market is firming in some areas, rate reductions are still available on property accounts with no catastrophe exposures and clean risk profiles.
“Much will depend on further catastrophe losses through the remainder of the year, with a focus on the ongoing Atlantic hurricane season. Should the second half of 2011 pass with few or no catastrophe losses, it is possible that U.S. insurance markets will remain stable into 2012.”
Major findings in the report include:
- Property insurance renewals in May and June showed fewer insureds securing rate decreases and a rise in the number of insureds experiencing increases. Overall, insureds with loss-driven programs or heavy catastrophe exposures generally saw rate increases of up to 15 percent, while those accounts with moderate to no catastrophe exposures generally saw flat to modest increases or decreases.
- The U.S. casualty insurance market remained stable and relatively predictable in the first half of 2011, with insureds typically renewing their programs at flat or near-flat rate levels. Challenges, however, began to emerge for insureds with difficult loss profiles, adverse loss experience, and in certain classes of business and in some workers’ compensation markets.
- Rates for most U.S. directors and officers (D&O) liability insurance programs at the midpoint of 2011 remained flat or experienced slight decreases. More significant reductions were generally available to insureds whose risk profiles had improved markedly from the past year or that pursued aggressive marketing strategies on all layers of their programs.
- Recent multimillion dollar privacy losses in key industry sectors have caused cyber liability insurers to review their rates, sublimits, and coverage enhancements. The market, however, remained competitive in the second quarter with rates decreasing 2 percent on average.
Marsh’s midyear update is based on data from Marsh’s Global Benchmarking Portal and reflects transactions brokered by Marsh through early July 2010. Marsh’s benchmarking data provides clients with the most current and relevant information available in the insurance brokerage industry to make informed risk financing and budgeting decisions.