Sentinel released its mid-year forecast this week, detailing insurance trends that affect market rates across specific lines of coverage from July-December 2016. To read the full forecast, click here. An executive summary is below.
The remainder of 2016 will be an insurance buyer’s market, as low rates and losses, especially catastrophic losses, along with an abundance of capital are altogether good news for consumers.
Earlier this year, Sentinel forecast rate decreases across most lines of coverage—some by 20 percent or more; a prospectus that is now reality.
The U.S. economy is feeding this trend. Low consumer spending and inflation, meager GDP growth of two percent and one of the lowest employment participation rates in a decade make for a highly competitive environment for insurance carriers. Factors that would materially change the current trend—an increase in interest rates, payroll, sales and property values—have yet to materialize.
With insurers struggling to realize organic growth, Sentinel expects the merger and acquisition trend to continue. Case in point: ACE/CHUBB finalized their merger in the first quarter of 2016. Merger and acquisition activity among brokers and agents continues, though many are property and casualty brokers acquiring employee benefit brokers in an effort to diversify their portfolios.
Executive liability and cyber policies, in particular, will continue to be more deeply underwritten through 2016.