In a hardening market with time-strapped underwriters, class of business expertise and strong partnerships are key to success.
Hardening in casualty continues in both primary and excess lines. There is continued rate pressure in the transportation, New York construction, long-term care and habitational segments, as well as marginal rate increase in products liability and non-habitational OL&T risks. Additionally, there is a significant volume of accounts being remarketed.
“Submission counts are up 25 to 35 percent with all carriers,” says Tom Dillon, AmWINS Executive Vice President and National Casualty Practice Leader. “Underwriters are overwhelmed with submissions and need help in identifying the right opportunities.”
Apartment risks remain one of the toughest casualty segments and, as noted in Q3, more owners are looking to obtain insurance themselves rather than be included within a property management company’s portfolio in order to save money. Third-party slip-and-fall claims plague this sector, along with assault and battery, depending on the area of the country the risk is located. Verdicts continue to go up, especially in areas like FL, NY, GA, CA and TX. Sadly, the jurisdiction in which the claim takes place is becoming the much larger factor in what carriers can do instead of the actual way in which the locations are managed.
Markets are also looking to place additional exclusions on accounts. “We are seeing more carriers wanting to restrict coverage by adding punitive forms such as habitability exclusions in California, action over exclusions in New York, and A&B sub-limits or exclusions in Georgia and Florida,” says Corey Alison, Executive Vice President, AmWINS Brokerage of Georgia.
Another notable shift is in the amount of loss runs a carrier will require. Not too many years ago three to five years was sufficient, which then shifted to five years being mandatory. Now it is not unheard for a carrier to request six, eight or even ten years of loss runs. The need for loss runs on new acquisitions is also necessary in most situations now as well.
Claim severity is an ongoing issue in the excess space. Continued multi-million-dollar judgements driven by sympathetic juries, time-limit demand changes, and social inflation have played a huge role in carrier behavior. Unfortunately, positive changes in tort reform are not expected anytime soon.
There is shrinking capacity in almost all areas of excess, especially auto, wildfire and active-shooter exposed risks. Shrinking capacity has caused rates to increase across the board. It is not uncommon to see capacity being cut in half while premium remains at the expiring or higher. Carriers are also being strategic as to where they participate on excess towers and are cautious as to the amount of capacity they provide on those towers.
The segment most affected by this capacity limitation is the trucking space. “Many carriers have either completely exited the space, reduced their capacity and/or moved up the tower. This has created a market where we need more carriers to build large towers, as well as the need to access the London and Bermuda marketplace in order to complete placements,” says Tim Larocca, Executive Vice President, AmWINS Brokerage of the Midwest.
Additionally, we continue to see a lack of carrier interest in lead $10m for real estate accounts. Many RPG programs that were offering $100m to $300m in limits have evaporated, creating a large demand with few carriers eager to write the class in a lead position in the brokerage marketplace. Those willing to participate are looking for premium levels at multiples of the expiring RPG program pricing and sometimes rely on facultative reinsurance to support their capacity.
“Players in excess habitational consider the lead $10 million to be a working layer and are pricing for it similar to the underlying primary,” says Terrance Villar, Executive Vice President, AmWINS Brokerage of California.
In a challenging casualty market, submission quality is essential to success. “Underwriters are pressed for time. They want to get the full picture of an account up front and hear the story of why a risk is a good write,” says Dillon. “Phone conversations and face-to-face discussions are still the best way to sell a deal.”
Client preparation is vital as well. Insureds deserve to be properly advised of the rapid change in our marketplace. Delivering difficult news is not pleasant, but the quicker brokers can identify and address a situation, the better the outcome will be for clients.
Legal Disclaimer. Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.
(c) 2017 AmWINS Group, Inc.
Over the last few years, the legal cannabis industry has seen rapid growth and had a significant impact on the U.S. economy. With states continuing to legalize its use, insurance needs for cannabis-related businesses are becoming a popular topic of discussion. This article examines the evolving cannabis industry by exploring five key issues impacting coverage.
Construction contract negotiations, which determine the kind and amount of insurance required for a construction project, can be time-consuming, complicated and frustrating. Project owners require contractors on a project to name the project owner as an additional insured on the contractor’s casualty insurance program. It's important that both project owners and contractors understand the coverage provided by these additional insured endorsements. This article discusses four common ISO additional insured endorsements related to commercial general liability policies purchased by contractors, including their limitations, conditions and exclusions.
A common complication during the claim process is the late reporting of claims. In some cases, a late claim can put the agent or broker's own E&O policy in jeopardy. There are many reasons for missing a reporting deadline; however, in most cases, they will not matter to the insurer or the courts. This article discusses typical claim reporting requirements, common causes of late reporting, and recommendations to mitigate the risk of late notice claim denials.
The theories of recovery, as well as the ensuing loss provisions, contained in property insurance policies are often complex and, at times, seemingly in conflict. Although a policy may not directly address these theories, their application by courts plays a significant role in the coverage determination process after the claim. It is essential that brokers understand the primary theories of recovery – Efficient Proximate Cause, the Concurrent Causation Doctrine, and the Anti-Concurrent Causation Doctrine – in order to navigate the challenging post-claim process and effectively serve their clients.
Ordinance or Law insurance coverage provides limited protection for costs associated with repairing, rebuilding, or constructing a structure when physical damage to the structure by a covered cause of loss triggers an ordinance or law. Compliance with ordinances and laws after a loss can add 50% or more to the cost of a claim. This article will help you educate your insureds on exclusions and limitations and help them take a proactive approach to their insurance program.
In 2017, the issue of sexual harassment – especially in the workplace – gained greater awareness as accusations of harassment by high-profile individuals were constantly in the news. In many cases, sexual harassment lawsuits seriously impacted businesses and their respective insurers. Employment Practices Liability Insurance not only provides protection against employee lawsuits, but can also help your clients mitigate their sexual harassment risks.