Rate increases for general liability and umbrella coverage moderated in the first half of 2022 to low double-digit price increases as more capacity entered the sector, industry experts say.
Available margins are limited but growing, they say.
While percentage increases have slowed from the high double- and triple-digit increases of recent years, some tough placements, such as commercial vehicles, remain.
Midyear increases in total primary liability averaged in the high single digits, said Chris Kopser, New York-based president and chief underwriting officer, senior casualty, for the Americas at Axa XL, a unit of Axa SA.
Rate increases in excess liability markets have been on a “roller-coaster ride” over the past few years and are now in the upper single-digit to low-double-digit percentage range, said Donnacha Smyth, president of Excess Casualty, Americas , on Axa XL.
On average, rates are still rising, but the magnitude of rate increases is slowing, said Douglas O’Brien, national practice division manager, casualty and alternative risk, in New York for USI Insurance Services LLC. In some cases in the second quarter, “we were able to negotiate more flat renewals for general liability, which two years ago was virtually impossible.”
“We’re still seeing positive rate movement, albeit slower than the rate change in 2020 and 2021,” said William McElroy, New York-based director of casualty portfolio for Aspen Insurance Holdings Ltd.
The new capacity has helped stabilize rates, said Bill Wilkinson, national president of casualty in Alpharetta, Georgia, for Risk Placement Services Inc., a unit of Arthur J. Gallagher & Co.
Umbrella capacity, which had shrunk significantly, is starting to re-emerge, Mr O’Brien said. Customers would have been “lucky” to get lines of $5 million to $10 million just two years ago, but some insurers are starting to put up $15 million to $25 million again, depending on the line of business and other factors. others.
“Filling a tower over $100 million is still a challenge, but $50 million and under is much easier today than it was a few years ago. Even up to $75 million is becoming easier to do,” Mr O’Brien said.
Policyholders should expect “moderate” rate increases for the remainder of 2022, said David Gale, area senior vice president, casualty practice, at Gallagher.
“We are still seeing rate increases, but we would agree that they are on a much smaller scale than they have been over the last couple of years,” Mr Gale said. New capacity in the middle and upper tiers of liability towers has helped moderate growth, he said.
According to market experts, sources of new capacity include: Ark Syndicate Management Ltd. in London, which expanded into Bermuda last year, and Bermuda-based general managing agent Arcadian Risk Capital Ltd., which operates under delegated authority on behalf of SiriusPoint Bermuda Insurance Co. Ltd. Neither company responded to requests for comment.
Multiple sources said liability coverage for commercial vehicle fleets remains a challenging proposition subject to capacity constraints and ongoing rate increases. “We remain concerned about recent nuclear settlement activity,” Mr. McElroy said.
Policyholders have been looking for different ways to control insurance costs as rates have risen over the past few years. Mr O’Brien said there is a willingness on the part of some insurers to offer more favorable terms when primary coverage is linked to excess coverage, “to provide price relief when they write more of the package.”
Higher deductions and withholdings are common. “We are absolutely having those conversations with customers about different ways to help manage the continued rate hike,” Mr. Gale. “Some customers make that decision and some don’t.”
The increase in inflation is also affecting insurance settlements. “Inflation is something we are thinking a lot about. What price do we charge today for the claim tomorrow?” said Mr. Smyth.