SSP’S David Beman: What to Expect in the 2019 Property & Casualty Commercial Insurance MarketNovember 30, 2018
The year 2017 included three major storms that caused catastrophic loss causing many to believe those storms would dramatically alter the 2018 property market leading to large rate increases. Despite damage from Hurricanes Maria, Irma, and Harvey, the 2018 property market actually stabilized with increased availability of alternative capital causing mostly modest rate increases.
What do we expect of the 2019 property and casualty market? The expectation is that insurance carriers will continue to take an increased look at their insured’s exposures and their own risk appetites as they did following 2017’s catastrophic events. This will result in similar modest rate increases that we saw in 2018 following the initial large rate surge immediately after the 2017 storms. For businesses with property that has a high exposure to catastrophic events such as hurricanes, tornadoes or hail, and those whom have experienced losses from catastrophic events in recent years, the rate increases will be higher. This line of business will be one we continue to watch with another year of storms that produced extensive losses from Florence and Michael and also include the recent California wildfires.
To reduce the potential for large rate increases on a client’s property policy, Sterling Seacrest Partners is recommending a complete and thorough review of the program in order to offer competitive solutions especially in catastrophic exposed conditions.
When looking at the market rate trends for 2018, my personal thoughts are that they will remain similar as we move into 2019 with modest rate increases. As mentioned above, property increases could be significant if the policy has seen loss activity, however, some programs will be able to renew with small increases or flat rates. In the casualty lines of business, it is expected there will be some low rate increases as well.
Auto liability will be a main driver of increased casualty rates. The action of insurance companies over the past few years to increase auto rates across the board has not turned around the auto loss costs in the industry. Distracted driving, increased costs to repair vehicles and a rising average cost to settle auto claims will lead to another year of high single digit to double digit rate increases on this line of business.
In the general liability market, an increased frequency of catastrophic liability claims is impacting general liability, umbrella, and excess towers. Pricing for the casualty market will most likely see increases in the low single digits as the market continues to have litigation stemming from lawsuits in many issues including the workplace, hiring and firing matters, discrimination, OSHA, and employee privacy protections.
Good news in the casualty market comes from the workers compensation line of business where renewal rates should remain low. Insurance carriers have seen their combined ratios develop below 100% which will allow for flat renewals or single digit rates decreases.
There are ways to offset the potential for predicted rate increases as there is still a significant amount of capacity and competition between insurance carriers. We recommend discussing all options such as alternative markets, captive and large deductibles with a qualified independent insurance agent.
Please do not hesitate to reach out directly with any questions. I can be reached directly at firstname.lastname@example.org or at my office 678.738.5178.