Market Overview
As we move into the last quarter of 2021, the overall commercial insurance market continues a tightening trend with year-over-year price increases on most casualty lines. Over the last two years, an environment with higher rates has attracted new entrants and additional capital to the marketplace. As a result, there is less volatility and more predictability as we move forward in this year’s renewal cycle. Depending on the quality of the risk and within certain industry sectors, the market remains very selective with underwriters looking to achieve overall profitability while putting less emphasis on their top line premium goals.
With the tight casualty market existing over the past two renewal cycles, underwriters are now closer to reaching their target rate levels and attachment points but remain cautious on their capacity and limit deployment. Policy terms and conditions continue to be modified, driven primarily towards tightening language to eliminate any liability exposure to communicable disease. As mentioned in prior reports, with the COVID-19–related losses being slow to emerge, there is a relatively unknown financial impact over the long-term for the insurers and the reinsurance market. Although the potential of future development of pandemic claims remains a contributing factor, the continued upward trends in attritional losses, nuclear verdicts, higher frequency of punitive awards and liberal class action certifications remain the main drivers guiding the increases in premium levels.
Rate levels on recent renewals have continued to rise across most industry sectors in casualty lines. Pricing for primary general liability is moving closer to a range of flat-to-single-digit increases but can still vary significantly depending on the account size and industry segment.
Pricing on lead umbrella and excess liability renewals remain on a much higher percentage increase level, although the significant increases over the past two renewal cycles are beginning to moderate and starting to show a slower rise year-over-year. The individual carrier limit offerings are now typically $5 million or less for lead umbrella and excess layers compared to the $10 and up to $25 million blocks that were available from a single carrier in past years.