Kristen Peed, corporate director, risk management and insurance at CBIZ Inc. discusses D&O renewal strategies, increased disclosure requirements expected from the Biden administration and how virtual meetings can actually lead to deeper business relationships.
By Gavin Souter
Commercial insurance prices rose in most lines last month, but the pace of increases was down slightly compared with the prior month, according to insurance exchange Ivans Insurance Services.
Commercial property insurance rates increased the most in May at 5.06%, but the level of increase was lower than the 5.51% recorded in April, the Tampa, Florida-based division of Applied Systems Inc. said.
Business owners policies renewing through the exchange in May saw a 5.06% increase on average, compared with 5.22% in April; commercial auto rates rose 4.74%, compared with 4.8%; general liability rates climbed 3.23%, compared with 3.29%; and umbrella liability rates increased 3.01%, compared with 3.18%.
Workers compensation rates continued to decline but at an accelerated rate, falling 2.68% in May, compared with 2.06% in April.
By Matthew Lerner
Aggregate commercial insurance pricing changes topped 6% for the first quarter, compared with the year-earlier period, according to Willis Towers Watson PLC’s Commercial Lines Insurance Pricing Survey, released Monday.
It was the second-consecutive quarter in which aggregate price changes reported by insurers exceeded 6% and continued a firming trend over the past several quarters, Willis said.
Prices rose nearly 2% for all four quarters of 2018 and the first quarter of 2019, climbing to almost 4% in the second quarter, almost 5% in the third quarter, and finally to over 6% for the past two quarters, the broker said.
Data for nearly all lines indicated significant price increases in the first quarter. The largest increases came in the excess/umbrella liability and directors and officers liability lines, both of which have seen “significantly accelerating increases over the past three quarters,” Willis said.
Commercial auto coverage was up near or above double digits for the 10th consecutive quarter, while property coverage saw near double-digit increases for the fourth consecutive quarter, Willis said.
Specialty lines price increases in aggregate were above double digits for the second consecutive quarter, Willis said.
Only workers compensation was down, “though the decreases have tempered somewhat for each of the last five quarters,” Willis said.
Reported price changes were more muted for small commercial accounts, higher for mid-market accounts, and approaching double digits for large accounts
“During the first quarter of 2020 we saw a continuation of substantial price increases for excess/umbrella and directors and officers liability,” said Alejandra Nolibos, senior director, insurance consulting and technology, Willis Towers Watson, in a statement released with the report.
By Judy Greenwald
Commercial property/casualty rates increased an average of 9.3% across all lines in the first quarter, according to the Council of Insurance Agents & Brokers’ latest pricing survey, which was issued Tuesday.
This compares with the average 7.5% reported for the fourth quarter, according to the Washington-based trade association’s data.
Large- and medium-sized accounts recorded average increases of 12.6% and 9.8%, respectively, while small accounts had an average increase of 5.5%.
All major lines except workers compensation experienced at least moderate rate increases during the quarter, with umbrella premiums increasing the most, at 17.3%, while commercial property increased 12%. Workers compensation reported a 1.2% decrease in premiums, although the trend of decreased premiums has moderated since a year ago.
COVID-19 also affected the market in the latter half of March, with 75% of respondents reporting an increase in business interruption claims in the first quarter, compared with 18% in 2019’s fourth quarter. A total of 47% of respondents reported increased demand for the coverage vs. 18% in 2019’s fourth quarter.
A total of 72% said COVID-19 has affected insurers’ ability to collect premiums, while 66% agreed it affected coverage availability.
More insurance and risk management news on the coronavirus crisis here.
North American commercial insurance buyers will continue to pay more across most lines of business and see their coverage terms and conditions scrutinized, as the industry braces for a potential loss of up to $80 billion from COVID-19, according to a report issued Thursday by Willis Towers Watson PLC.
Despite the decline in economic activity leading to large reductions in insurable values, not a single line of business is expected to see rate decreases in the months ahead, Willis said in its Insurance Marketplace Realities 2020 Spring Update.
“The pandemic and economic downturn will very likely extend the hard market through 2021, with market discipline continuing as insurers’ losses materialize and their investment income deteriorates,” Joe Peiser, global head of broking, Willis Towers Watson, said in a statement.
Overall, 23 lines of business are expected to see increases, with 11 of those seeing steeper increases than they did in the fall of 2019, according to the report.
Umbrella/excess liability, directors and officers liability, and property are among the lines that will be most impacted by the pandemic, Willis said.
Just five lines – workers compensation, kidnap and ransom, terrorism, surety and international casualty – are projected to see either a mix of increases and decreases or flat renewals.
Catastrophe-exposed property risks with losses are expected to see rate increases of 30% or more, while catastrophe exposed risks will see increases of 15% to 25%.
Steep rate increases continue and may accelerate, and the economic downturn brought on by the pandemic could have a “deep and broad impact on property risk and coverage,” the report said.
There is also a “vast cloud of uncertainty” hanging over the market as insurers face lawsuits and legislative actions attempting to force them to provide business interruption coverage for pandemics both prospectively and retroactively, Willis said.
Buyers can expect increased scrutiny by insurers as they look to limit or reduce coverage, it said.
The commercial liability marketplace, particularly for umbrella/excess liability is becoming “dramatically” more challenging, as deteriorating loss trends continue to hurt profitability, Willis said.
Umbrella liability rates are expected to increase 40% or more, while excess liability rates will increase 150% of more for high hazard events, according to the report.
The North American liability marketplace continues to experience “significant” catastrophic losses from wildfires, active shooter, concussion/traumatic brain injury litigation, auto accidents, opioids, and sexual assault and molestation claims, Willis said.
Liability insurers are also reevaluating coverage grants, reducing available capacity and requiring higher attachment points, it said.
In directors and officers, buyers already bracing for significant price hikes could face further upheaval given the overall economic uncertainty and the likelihood of a growing number of bankruptcies, Willis said.
If executives face blame for decisions related to the pandemic the market will worsen, the report said.
D&O rates for public company risks are expected to increase by 15% to 50% or higher, while rates for private/not-for-profit risks will increase by 7.5% to 50% or higher.
“Renewals are challenging, with the COVID-19 environment heightening underwriting scrutiny of D&O exposures,” the report said.
Despite the uncertainty brought about by the pandemic, business is being conducted with a strong degree of civility, with insurers granting accommodations, especially in extenuating circumstances, Mr. Peiser said in the report.
Another positive development amid the crisis is the potential creation of a federal backstop for pandemic risk and insurance, he said.
“Pandemic risk is different, and the exploration of solutions should be robust and involve all stakeholders, public and private. But let’s go one step further and include other systemic global challenges and priorities, such as climate change and cyber terrorism,” Mr. Peiser said.
More insurance and risk management news on the coronavirus crisis here.
By Thomson Reuters
(Reuters) — German insurer Allianz said Tuesday that a key measure of capital may fall below the company’s target floor level as it faces claims for disruption caused by the coronavirus crisis.
Allianz, which earlier reported a nearly 30% slump in first-quarter profit, is one of many European insurers warning about the outlook as clients claim for business interruption and canceled events, while demand for auto and travel insurance has fallen.
Its so-called solvency ratio dropped to 190% in the first quarter, down from 212% at the end of last year, and Chief Financial Officer Giulio Terzariol said it may fall below the insurer’s 180% limit although this would not be a “big concern.”