Market conditions seen elsewhere in the E&S marketplace are working their way into the small account and personal lines sector as well.
The small account sector has not been immune from the hardening conditions seen elsewhere in the excess and surplus marketplace. Significant changes from this same time in 2018 include the tightening of underwriting rules, increasing rates, and reductions in available capacity.
“The pace of change in the small account space is lagging the market, only because it takes longer to affect change in this space,” says Tony Gresham, President of AmWINS Access Division. “However, the pace is accelerating. At the beginning of the year, we were seeing 1 to 2 percent price increases, whereas at mid-year it was 5 or 6 percent.”
Rate increases and capacity restriction are more pronounced in CAT-affected regions, primarily wind tier 1 areas. For inland risks, and in areas of the U.S. less prone to wind events such as the upper Midwest or the Northeast, the change is less significant.
Changes in the small account sector are possibly the result of two separate but similar events. First, the Lloyd’s performance management process, which is expected to shrink its 2019 gross written premium by around 5 percent, has created dramatic changes in the North American property market. “Lloyd’s desire is to improve overall marketplace results, and the tool they are using is to manage capacity and require syndicates to show a better return before providing access to more capacity,” Gresham says.
Second, years of General Liability rate inadequacy drove carrier results to unacceptable levels, and carriers are finally able to re-capture some much needed rate. While not quite the robust increases of the property market, GL rates have taken a positive turn for the first time in nearly a decade.
Similar dynamics are also impacting personal lines. “Lloyd’s has traditionally made up anywhere from 40 to 50 percent of the E&S homeowners market, so any action they take has both a direct effect on those placements and a ripple effect on other E&S markets,” says David Lavins, Chief Operating Officer of AmWINS Access Division.
“Additionally, Lexington—historically the second largest player in E&S personal lines behind Lloyd’s—has also been trying to reduce concentrations, particularly in California and Florida. Ironshore, another large E&S homeowners market, is looking to exit the homeowners space. So, you have several of the most significant markets all moving in the same direction at the same time,” Lavins says.
Among the more challenging classes in the small account sector is habitational, including condos and apartments, followed by hotels, motels, and convenience stores. While other classes like restaurants, bars, and taverns, are seeing an increase in claim frequency and severity, resulting in significant changes to the liquor liability market.
These changing market conditions can be a particular struggle for retailers who have not experienced them before. They need to partner with wholesalers that have a broad market view and access to a variety of markets, in order to properly address placement challenges faced in the current climate.
“Retailers aren’t seeing a level of consistency from carriers that allows them to manage their expiration dates in a predictable way. They are having to do more work to find new and creative solutions, which is where having a wholesaler that has many options available to them pays dividends,” Gresham says. “Lean on your wholesalers as experts to find out about what’s going on in the market and prepare your clients for change.”
“If you’re a retail agent and your wholesaler is not coming to you proactively, you need to reach out to them,” Lavins adds. “And if they don’t know what renewals and terms are coming over the next few months, you need to consider if your current partners have what it takes to get the job done.”
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.