US Insurance Markets and Risk Trends in 2017

With few exceptions, buyers of commercial insurance can expect to see positive market conditions in 2017, barring unforeseen circumstances, according to speakers on Marsh’s January 25, 2017 The New Reality of Risk® webcast.

Property Insurance Market Remains Buyer Friendly

“Generally speaking, the property marketplace remains very buyer friendly,” said Duncan Ellis, leader of Marsh’s Property Practice. “We saw rates in 2016 trend down in the mid-to single percentage digits.”

Despite a favorable marketplace, insurance buyers should watch for the pending reauthorization of the National Flood Insurance Program (NFIP). Terrorism risks also remain top of mind for insurers, particularly for those in Tier 1 locations, in high accumulation areas, and/or with a history of terrorism events.

Meanwhile, insurers and buyers are increasingly considering first-party risks related to cyber, particularly business interruption and contingent interruption. Some available endorsements can address first-party cyber issues, “and we are actively looking to add that to our clients’ all risk property programs,” Mr. Ellis said.

Casualty Insurance Markets: Expect Soft Conditions

Buyers of casualty insurance can expect similarly soft conditions in 2017, said Steve Kempsey, Marsh’s US Casualty Practice leader. The workers’ compensation market generally continues to be aggressive and favorable for most buyers; however, companies with large employee concentration risks or operations in Florida could face a more limited market.

Although the general liability line is experiencing favorable renewal results, auto liability continues to be the most challenging casualty line. “Many insurers have experienced a frequency in severity of auto losses and thus are seeing deteriorating results,” Mr. Kempsey said. “Some insurers have stopped underwriting more challenging transportation risks, mainly long-haul trucking.”

Financial and Professional Liability Rates Competitive

Buyers of directors and officers (D&O) liability insurance can also expect favorable market conditions. “We see a continuation of soft market conditions over the last several years, with no sign that competition or capacity will be reduced,” said Gregory Spore, placement leader in Marsh’s FINPRO Practice.

Competition among cyber liability insurers is expected to be favorable for clients in 2017. “Rates have plateaued in most segments and better risks should expect premium relief in 2017,” Mr. Spore said.

Global Risks

Panelists also discussed global risk and insurance trends, including the rise of anti-establishment and nationalistic parties, global rivalries, and succession risks. “These trends stress the need to think creatively about risk and scenario planning in order to address the challenges and opportunities they represent,” said Michael Rodgers, West Zone leader of Marsh Multinational Client Service.

Listen to the webcast replay.