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Key Factors for Renewals
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2020
Year in Review
2020
This has been a year no one will soon forget and has affected industries around the world, including the insurance marketplace. Our brokers provide an overview on many segments of the insurance industry in this review of 2020.
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Submission clarity and quality will be increasingly critical
Renewals are taking longer than normal
Longer Renewals
Increased retentions or reduction in sublimited coverages
Open to Options
Proactively mitigating risks through comprehensive safety
Quality Controls
May need to identify alternative Insurers to add to the program
Underwriting Scrutiny
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Rate Changes
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The trend that began early in the year with rates flat to slightly higher continued through the third quarter.
As the pandemic took hold, the pressure toward generally flat to higher rates gained momentum in terms of market breadth. Domestic markets became more conservative on risk selection and placement of capacity, regardless of loss experience or growth.
Accountants Professional Liability
Firms with favorable claims history and significantly increased revenues experienced minor rate adjustments
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The insurance marketplace for design firm Professional Liability continued to firm, following a relatively stable, but hardening trend. The international market, led by Lloyd’s of London, experienced challenges that may lead to London clients re-engaging the U.S. marketplace at a primary level.
Architects & Engineers
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Some Insurers cut capacity to or per project on project-specific placements
$10 million
per firm
$10 million
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As the pandemic took hold, the pressure toward generally flat to higher rates gained momentum in terms of market breadth. Domestic markets became more conservative on risk selection and placement of capacity, regardless of loss experience or growth.
Accountants Professional Liability
Most renewals saw minimum increases of
The Aviation insurance marketplace tightened significantly, with carriers refusing to write certain classes of business. High-profile losses contributed to rotorcraft being hit hard. Greater underwriting scrutiny across all lines of coverage existed.
Aviation
High-risk operations’ premiums were up
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and limited coverage
20% 30%
to
50% 100%
to
The insurance marketplace for design firm Professional Liability continued to firm, following a relatively stable, but hardening trend. The international market, led by Lloyd’s of London, experienced challenges that may lead to London clients re-engaging the U.S. marketplace at a primary level.
Architects & Engineers
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Firming continued through the first half of 2020 due to poor underwriting results. We expect rates to continue to rise throughout 2020 and 2021 as loss trends outpace rate increases. Stewardship meetings are increasingly important to keep clients apprised of market conditions and to manage renewal expectations throughout the client’s organization.
Casualty
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Excess Liability rates increased
or more for higher hazard risks
25%
Umbrella Liability rates increased
50%
or more for higher hazard risks
150%
to
The Aviation insurance marketplace tightened significantly, with carriers refusing to write certain classes of business. High-profile losses contributed to rotorcraft being hit hard. Greater underwriting scrutiny across all lines of coverage existed.
Aviation
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The impact of the pandemic is still largely unknown. While the industry sustained employment through the first half of the year, the overall volume of construction starts was significantly reduced. An increase in rates and a reduction in coverage and capacity seems likely.
Construction
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Increased underwriting scrutiny reduced the number of participating carriers on what previously may have been considered a benign risk
Firming continued through the first half of 2020 due to poor underwriting results. We expect rates to continue to rise throughout 2020 and 2021 as loss trends outpace rate increases. Stewardship meetings are increasingly important to keep clients apprised of market conditions and to manage renewal expectations throughout the client’s organization.
Casualty
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While the world moved quickly to cyberspace, cybercriminals began to exploit vulnerabilities and prey on fear. The Cyber insurance market has since evolved with the risk landscape. New generation ransomware attacks, coupled with other cybercrimes, have had a significant impact on Cyber Insurers.
Cyber
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increases were occurring on large, complex risks, along with enhanced underwriting and tightening of coverage terms
10%
to
20%
On average
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The impact of the pandemic is still largely unknown. While the industry sustained employment through the first half of the year, the overall volume of construction starts was significantly reduced. An increase in rates and a reduction in coverage and capacity seems likely.
Construction
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When the pandemic hit, the employee benefits marketplace shifted. Compliance became an urgent priority as government regulations were passed almost daily, requiring significant action by employers. Prior to negotiation, most insurance carriers were conservative in their pricing for Insured renewal; 20% - 30% increases were fairly common. The marketplace remained competitive and increases were often mitigated either with a competing Insurer or by using a lower bid to leverage down incumbent carrier bids.
Employee Benefits
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increases were fairly common
20%
to
30%
Whether insured or alternatively funded, increases were in the low single digits for
of the expected cost in the COVID-19 months for some clients
30%
Medical costs were as low as
While the world moved quickly to cyberspace, cybercriminals began to exploit vulnerabilities and prey on fear. The Cyber insurance market has since evolved with the risk landscape. New generation ransomware attacks, coupled with other cybercrimes, have had a significant impact on Cyber Insurers.
Cyber
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2021
30%
Despite business interruption and disinfection expense claims reported for pandemic-related losses, through July some markets had not broadly implemented new language. Many Environmental Insurers avoided the healthcare industry, which may significantly limit competition in the future.
Environmental
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(i.e., where communicable disease threats were not already excluded)
By the end of September, many Insurers had introduced new exclusionary language
When the pandemic hit, the employee benefit marketplace shifted. Compliance became an urgent priority as government regulations were passed almost daily, requiring significant action by employers. The marketplace remained competitive and increases were often mitigated either with a competing Insurer or by using a lower bid to leverage down incumbent carrier bids.
Employee Benefits
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The U.S. E&S lines market is reporting double-digit growth in direct written premiums for the second consecutive year, with expectations for this trend to continue into 2021
The U.S. commercial insurance marketplace continues to harden, largely due to this year’s global pandemic, severe weather and social inflation. The standard market challenges are pushing risks into the Excess & Surplus lines sector and creating significant growth.
Excess & Surplus (E&S) Lines
Excess liability and umbrella coverage are seeing rate increases of as much as
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With shrinking capacity, rising rates, and new and emerging insurance risks, it’s critical to partner with a trusted, experienced wholesaler for your E&S business placements. Jencap is EPIC’s wholesaler of choice; with 30+ exclusive programs, 250+ wholesale brokerage markets, and over 50 domestic and international binding authority appointments. Visit www.jencapgroup.com to learn more.
30%
with capacity shrinking
Despite business interruption and disinfection expense claims reported for pandemic-related losses, through July some markets had not broadly implemented new language. Many Environmental Insurers avoided the healthcare industry, which may significantly limit competition in the future.
Environmental
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With shrinking capacity, rising rates, and new and emerging insurance risks, it’s critical to partner with a trusted, experienced wholesaler for your E&S business placements. Jencap is EPIC’s wholesaler of choice; with 30+ exclusive programs, 250+ wholesale brokerage markets, and over 50 domestic and international binding authority appointments. Visit www.jencapgroup.com to learn more.
The pandemic and shelter-in-place orders accelerated the hardening of the Executive Risk insurance market, which is braced for unprecedented risk, economic uncertainty, social change and corporate transformation.
Executive Risk
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The “new normal” for Executive Risk lines of business will involve steep price increases, capacity decreases, enhanced underwriting and coverage restrictions
Despite business interruption and disinfection expense claims reported for pandemic-related losses, through July some markets had not broadly implemented new language. Many Environmental Insurers avoided the healthcare industry, which may significantly limit competition in the future.
Environmental
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Entering 2020, underwriters were working to recapture premiums to offset the loss years (2017 and 2018). After the pandemic began, premiums rose across the hospitality sector. Underwriter referral processes continued to be backlogged and Workers’ Compensation rates continued to harden.
Hospitality
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27%
Property rates increased
29%
Umbrella rates increased
14%
General Liability rates increased
*
*Council of Insurance Agents and Brokers
The pandemic and shelter-in-place orders accelerated the hardening of the Executive Risk insurance market, which is braced for unprecedented risk, economic uncertainty, social change and corporate transformation.
Executive Risk
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Despite demonstrable rate gains in 2019, this year began with continued concern over the ability to achieve an underwriting profit at current rates. As the pandemic took hold, the pressure toward higher rates maintained momentum in the LPL segment for Errors & Omissions and ancillary lines of Management Liability, EPL and Cyber Liability.
Lawyers Professional Liability (LPL)
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Large firms faced another round of
7%
to
10%
rate increases
range
2%
to
5%
Midsize firms kept rate increases in the
10%
to
15%
Lloyd’s of London rate increases ranged from
Entering 2020, underwriters were working to recapture premiums to offset the loss years (2017 and 2018). After the pandemic began, premiums rose across the hospitality sector. Underwriter referral processes continued to be backlogged and Workers’ Compensation rates continued to harden.
Hospitality
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Marine
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Cargo rates increased
7.5%
7.5%
Throughout 2020, the Ocean Cargo market showed resiliency, with rates up 7.5% on average. Several major carriers reduced their line on stock to $10 million, down from $25 million – driving the need for more quota share policies amidst increased retentions and more restrictive terms and conditions.
Ocean Cargo
U.S. Marine market capacity remained strong with increased pricing overall, while London continued to retreat and Caribbean-based business was difficult to place.
Hull & Machinery/Protection and Indemnity/Excess Marine Liabilities
on average
The pandemic and shelter-in-place orders accelerated the hardening of the Executive Risk insurance market, which is braced for unprecedented risk, economic uncertainty, social change and corporate transformation.
Executive Risk
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Hull & Machinery/Protection and Indemnity/Excess Marine Liabilities
Ocean Cargo
Throughout 2020, the Ocean Cargo market showed resiliency, with rates up 7.5% on average. Several major carriers reduced their line on stock to $10 million, down from $25 million – driving the need for more quota share policies amidst increased retentions and more restrictive terms and conditions.
Uncertainty created by COVID-19 and lack of a unified Federal response resulted in some underwriters putting a moratorium on new business. Other carriers delayed quoting on renewals.
Medical Malpractice
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15%
to
30%
Accounts with large losses impacting excess layers saw rate increases of
Accounts without losses saw rate and premium increases of
5%
to
15%
Lawyers Professional Liability (LPL)
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While the world moved quickly to cyberspace, cybercriminals began to exploit vulnerabilities and prey on fear. The Cyber insurance market has since evolved with the risk landscape. New generation ransomware attacks, coupled with other cybercrimes, have had a significant impact on Cyber Insurers.
Personal auto results and rates remained stable throughout the year. COVID-19 discounts extended by carriers early on in the pandemic have expired. Homeowner rates increased in most markets. Properties at high risk of wildfire or hurricane/wind saw significant rate increases, sometimes as much as fivefold.
Personal Lines
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6%
to
8%
Homeowner rates in non-high risk areas rose
2%
to
3%
Auto rates rose
Uncertainty created by COVID-19 and lack of a unified Federal response resulted in some underwriters putting a moratorium on new business. Other carriers delayed quoting on renewals.
Medical Malpractice
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Specific coronavirus-related coverage changes included tightening contamination exclusions, adding specific exclusions for communicable disease, or significantly lowering limits for policies that provide some coverage. Many carriers cut back on capacity offered at renewal; some pulled out of the Property market completely.
Property
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25%
to
60%
for properties with losses and CAT exposure
for CAT-exposed properties
15%
to
50%
for properties with no losses and not CAT-exposed
5%
to
25%
Third quarter Property renewals saw average rate increases of
Despite demonstrable rate gains in 2019, this year began with continued concern over the ability to achieve an underwriting profit at current rates. As the pandemic took hold, the pressure toward higher rates maintained momentum in the LPL segment for Errors & Omissions and ancillary lines of Management Liability, EPL and Cyber Liability.
Lawyers Professional Liability (LPL)
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The first quarter of 2020 was a quiet period for construction. With the combination of numerous gross domestic product (GDP) components ceasing operations and a limited number of construction projects deemed essential, the second quarter was flat in comparison to the first. No changes are expected in the market through the first quarter of 2021.
Surety
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Essential public works projects were bid and funded by previously approved budgets. Privately funded work slowed down. Housing projects that were already in progress continued, but with limitations on the number of laborers onsite.
Construction Surety
Larger commercial clients may use surety bonds to protect their cash holdings with better credit terms from surety companies than what they currently have with banks. This is a good time for customers and brokers to strengthen relationships with bankers, CPAs and especially Surety underwriters.
Commercial Surety
Knowledgeable customers and brokers enhanced and expanded relationships with bankers, CPAs and Surety underwriters
of respondents anticipated a downturn in total revenue for 2020*
30%
*Associated Builders and Contractors
Personal auto results and rates remained stable throughout the year. COVID-19 discounts extended by carriers early on in the pandemic have expired. Homeowner rates increased in most markets. Properties at high risk of wildfire or hurricane/wind saw significant rate increases, sometimes as much as fivefold.
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U.S. Marine market capacity remained strong with increased pricing overall, while London continued to retreat and Caribbean-based business was difficult to place.
Hull & Machinery/Protection and Indemnity/Excess Marine Liabilities
Essential public works projects were bid and funded by previously approved budgets. Privately funded work slowed down. Housing projects that were already in progress continued, but with limitations on the number of laborers onsite.
Construction Surety
Insureds had to allow plenty of time to push underwriters for coverage offerings
Middle Market Technology and Life Science continued to efficiently manage a remote work environment and remain operational throughout the pandemic. Still, some industry segments, such as lab and medical device companies, experienced reduced revenue.
Technology & Life Science
Underwriters requested much more information
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Personal auto results and rates remained stable throughout the year. COVID-19 discounts extended by carriers early on in the pandemic have expired. Homeowner rates increased in most markets. Properties at high risk of wildfire or hurricane/wind saw significant rate increases, sometimes as much as fivefold.
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2020
Report
Rate Changes
Aviation*
Rotorcraft/Helicopters Light Aircraft Corporate Aircraft Fixed Base Operators Component Product Manufacturers Aircraft Manufacturers
*All based on no loss history past 10 years
Casualty
Auto Liability General Liability Workers’ Compensation International Casualty Umbrella Liability Excess Liability
+20% to +50% +20% to +30% +20% to +50% +20% to +25% +20% to +30% +50% or more
+10% to +30% or more for higher hazard risks +10% to +15% +3% to +5% or more with adverse loss experience Flat to +5% +25% or more for higher hazard risks +50% to +150% or more for higher hazard risks
Construction
General Liability Auto Liability and Physical Damage Workers’ Compensation Excess Liability/Umbrella (lead) Excess Liability/Umbrella (higher layers) Builders’ Risk Professional Liability Contractors Pollution Liability Project Specific Controlled Insurane Programs (Liability)
Flat to +15% +5 to +15% Flat +20% to +100% +5% to +20% Flat to +10% Flat to +5% Flat to +25%
+25% to +100% (depending on expiring lead limit & assuming same limit on renewal)
Employee Benefits
Insured renewals Self-insured renewals Stop loss renewals Medical Dental
+20% to +30% +15% +20% to +30% +6% Flat to slight decrease
Hospitality
General Liability Property Umbrella
+10% to +15% +25% to +30% +25% to +30%
Professional Liability
Accountants Professional Liability Lawyers Professional Liability Overall Professional Liability
0% to +15% depending on claims/revenue growth +2% to +10% 0% to +15%
Technology & Life Science – Mid Market
Product Liability, E&O/Cyber D&O and EPLI
+7% to +12% no losses +15% to +25% (clean, private company) +20% to +50% (clean, public company)
*Important disclaimer: the ranges above are macro observations only. Every risk is comprised of its own characteristics (such as industry, loss history, geography, etc.) that may impact renewal pricing.
Surety (Construction and Commercial)
Flat
Property
+5% to +25% no losses; not CAT-exposed +15% to +50% CAT-exposed +25% to +60% losses; CAT-exposed
Personal Lines
Auto Homeowners*
*Homeowners in high-risk fire and hurricane/wind areas are seeing fivefold rate increases in some cases.
+2 to +3% +6% to +8%
Medical ProFessional Liability
+5% to +15% + minimum +15% to +30%+ for loss impacted and difficult jurisdictions
Marine
Cargo including STP Excess stock/warehouse Hull Primary P&I Primary MGL Excess Liabilities: Excess of $1 million Excess of $5 milion
+5% to +20% +15% to +25% (when capacity is available) +5% to +10% +10% to +15% +5% to +15%
+20% to +25% (very limited capacity) +10% to +15%
Environmental
No Losses and Low or Medium-Risk Industry (class-A office; warehouse risks); most CPL business
Moderate-Risk Class or Complex Risk (mold/habitational; large portfolios; tougher CPL risks)
Losses (frequency or severity) and/or High-Risk Class (heavy industrial; PFAS or other emerging risks)
0% to +5%
+5% to +10% (multi-year renewals) or up to +5% for annual renewals
+20%+; coupled with coverage restrictions (multi-year renewals) or up to +10% for annual renewals
Directors & Officers Liability*
+5% to +25% +25% to +50+%
Employment Practices Liability
+5% - +25%
Cyber
*Rate increases appear to be less pronounced on the small, non-complex risks, at tis time.
+10% to +20%
Line of Coverage
Rate Change
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*Certain industry classes are experiencing higher rate increases in addition to retention increases
Private Company Public Company
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(+100% for high risk ops)
+20% to +100% +5% to +20% Flat to +10% Flat to +5% Flat to +25%
