US Insurance Markets 2016: Midyear Update

US commercial insurance marketplace conditions remain generally positive for buyers through the first two quarters of 2016, according to speakers on Marsh’s August 3, 2016, The New Reality of Risk® webcast.

Across several insurance lines, many buyers renewed their programs with rate decreases in the first half of the year, continuing soft market trends seen in recent years. In addition to offering favorable rates, many insurers appear amenable to negotiating terms and conditions for buyers.

The outlook for the property insurance market “remains positive for most insurance buyers, who may benefit from decreased rates, broadened coverage, and opportunities for new approaches to property insurance on a multiyear basis,” said Duncan Ellis, Marsh’s US Property Practice leader.

Conditions in workers’ compensation are similarly favorable, for both guaranteed cost and loss-sensitive buyers, said Steve Kempsey, Marsh’s US Casualty Practice leader. Automobile liability remains a challenging line, with some insurers no longer willing to underwrite truckers and difficult fleet exposures.

In the second quarter of 2016, 83% of directors and officers insurance buyers renewed their programs with rate decreases. “Right now, we’re experiencing a soft market in which insurers are competing aggressively for business,” said Sarah Downey, directors and officers liability product leader in Marsh’s FINPRO Practice.

After a volatile 2015, rates for cyber insurance appear to be stabilizing, with smaller rate increases and some clients potentially seeing rate reductions in the second half of 2016. “Most clients are reinvesting any savings on their cyber programs into expanding coverage for first-party risks and increasing program limits,” said Tom Reagan, Marsh’s Cyber Practice leader.

Geopolitical Changes and the Insurance Markets

The recent attempted coup in Turkey highlights the often unpredictable nature of political risk, yet the market generally remains favorable to buyers. “Insurers continue to view political risk as an attractive line of business, and are competing aggressively,” said Angela Duca, a senior vice president in Marsh’s Political Risk and Structured Credit Practice.

In addition to discussing the state of the insurance marketplace, the panel covered strategies for successful renewals and other trends, including the UK’s recent vote to leave the European Union.

Listen to the webcast replay.