The past few years have been harsh ones for many industries and we are here to champion for our clients as much as ever. To that end, we keep a careful eye on market trends and a close relationship with underwriter partners, which allows us to bring you our latest quarterly market update for Q1 2020. Of course, the major global event of Q1 was the explosion of COVID-19. Other than discussions of how business interruption claims may or may not be covered, the pandemic has not yet impacted premiums and capacity. We do expect this to change through 2020.
In this Commercial Lines Market Update for Q1 2020, we examine the trends and factors at play in all segments of the commercial insurance market. We asked carriers what they are seeing from their point of view, and have included their perspectives in their own words. View data on factors like class-action suits, cyber threats, and the natural disasters that affect your renewal, so you can be prepared for what lies ahead. Read the full Update here; or peruse highlights below.
Read The Full Update
Directors & Officers liability rates continue to increase due to several factors. For instance, new and heretofore unprecedented D&O exposures have appeared in recent years, such as privacy oversight, #MeToo, and climate change. As capacity shrinks, carriers are forced to push rates even harder. In this Update, several carriers share their perspectives of inadequate compensation for the risks assumed, citing their top reasons why premiums are going up. Read more in the full Update about the new average settlement size as well as which industries seem hardest hit.
The price of commercial property has been on the rise for well over two years. This circumstance alone would have an impact, but the recent uptick in hurricanes and wildfires and other large risk losses has also impacted capacity and driven premiums up even further, with rate increases ranging between 3%–25% merely for standard renewals. Read more about the impacts of low interest rates and higher losses in the full Update.
Cargo & Stock Throughput
Similar to property, the cargo market is highly vulnerable to losses, and those losses have been mounting over the last half-decade. 2020 has been no kinder: one of the largest individual Lloyds-insured stock losses in recent memory was incurred when a tornado hit a Dell storage facility in Nashville, Tennessee. Now, the best-case scenario is a cargo-only policy with a good loss history, which is seeing only single-digit rate increases. Read more about the major shifts among carriers for these coverages along with specific hard-hit industries in the full Update.
The casualty market has been characterized by an increase in average claims along with a boom in settlement size—verdicts over $20 million have grown three times in the last decade. Predictably, a concomitant rise in rates has followed. Even so, commercial auto, in particular, has not been profitable for nine years and counting. Read more about how mega settlements and litigation financing are impacting trends in the full Update.
The frequency and severity of ransomware attacks has risen. Between Q3 and Q4 2019, ransom payments ballooned 104% and resulted in an average 16.2 days of downtime. Privacy regulation has also begun to have an effect, levying GDPR fines of 4% of annual revenue or CCPA fines of up to $7500 per consumer. Despite these factors, pricing and capacity for cyber liability have remained generally stable. Read more about board oversight and trends in cyber underwriting in the full Update.
Download the full Update here for a more in-depth, detailed look at each industry, including summaries of trends and valuable perspectives from prominent carriers.