At the beginning of 2020, we predicted that insurance carriers would push moderate rate increases on most lines, yet buyers could continue to have the upper hand in most rate negotiations with carriers… and at the start of the year this was true in both instances.
2020 began with a growing positive outlook for businesses with proper risk management and an eye on the future. Businesses were focusing on data analytics, Insurtech, Internet of Things, and Telematics to boost job site safety and control losses. These were considered an investment in the future as market conditions slowly evolved.
Due to growing national and global economic concerns, that changed quickly within the first quarter and continued throughout the year. Commercial property and automobile rates increased at a rate of 5% each month in the second quarter per Ivans Insurance Services with Casualty and Umbrella/Excess averaging around 4%.
Per Market Scout, commercial insurance buyers saw rate increases on every line of coverage in the third quarter of 2020, averaging 6.25% overall compared to 4.8% overall in second quarter of 2020.
By line, 3rd Quarter increases were reported by Market Scout:
Directors and Officers Liability – 11.5%
Umbrella and Excess Liability – 8.5%
Commercial Automobile – 8%
Professional Liability – 7.5%
Commercial Property – 7%
Workers’ Compensation – 0.5% (the first increase this line of business has seen in over five years)
By industry, transportation and habitational had the highest average rate increases of the quarter at 10.5% and 8% respectively.
We anticipate this “rate creep” to continue for Property, Directors & Officers Liability and Umbrella/Excess Liability in the fourth quarter of 2020.
Reinsurance prices have increased significantly, some up to 60%, at mid-year renewals. Insurers expect reinsurance rates to increase for end of the year renewals based on a survey of almost 40 reinsurance buyers by Moody’s Investors Services Inc. 80% of respondents expect property reinsurance rates to increase 5-15% and 55% of respondents expect casualty reinsurance rate increases of 5-15%.
As 2020 winds down and we give way to 2021, new market trends are being watched. New exposures are being addressed. New paths are being forged. Now is the time to partner with a risk advisor to carry you thru these unprecedented times. For further information on what to expect in 2021 check out the entire 2021 Market Forecast and Review at sentinelra.com.
