Broker Willis Towers Watson has updated its commercial insurance rate predictions for 2016, and says that price declines are slowing.
A complex commercial insurance marketplace—marked by increased underwriting scrutiny and potential challenges stemming from the changing carrier landscape—is raising the likelihood that companies will experience some price increases in various lines.
Back in October 2015, Willis said 10 lines of insurance could expect decreases and just five lines of insurance could expect increases in 2016.
Now the updated outlook for 2016 is that nine lines of insurance are expecting decreases and eight lines of insurance—auto, cyber, employee benefits, employment practices liability, errors & omissions, fidelity, kidnap & ransom, and trade credit— are expecting increases.
And for lines where it anticipated the largest price hikes—cyber and errors & omissions—those price hikes are accelerating.
With hurricane season approaching, it’s worth noting that property remains among those lines expecting a decrease, but average rate reductions are slowing down.
Non-CAT accounts have enjoyed rate reductions for a longer period and carriers cannot afford to cut rates much further, Willis Towers Watson notes.
For cyber renewals, primary premium increases are 5 percent to 15 percent for most buyers and 15 percent to 30 percent for POS retailers and large health care companies with no losses—with additional increases on excess layers.
Willis Towers Watson notes that excess cyber losses have caused a few markets to stop writing large accounts and others to increase their premiums significantly in upper layers of $75+ million placements.
Despite the reduction in capacity by some carriers, available limits in the marketplace are approximately $350 million to $400 million.
Capital markets are also reviewing cyber to determine if they can provide additional relief.
Meanwhile, insurers are focused on employee training, handling of sensitive data, holistic security practices for outsourced data infrastructure, and internal reporting structure, according to Willis Towers Watson.