The US property insurance market is set for a stable renewal at 1 January with rate reductions in a few limited cases, according to USI’s 2019 Commercial Property & Casualty Market Outlook.
In loss affected areas of the US, rates are projected to increase in the low single digits, particularly in catastrophic wind zones, according to USI. California property rates are also expected to firm.
US carriers are “conveying a desire to capture increases in named storm or hurricane deductibles” for loss hit accounts, USI said.
Accounts with wind-related exposures and losses in geographic areas such as North and South Carolina, Florida and Texas) will renew at higher rates with “potentially less broad terms, and reduced capacity,” USI said.
Examples of tightening manuscript property polices include storm surge coverage within named windstorm or flood, percentage deductibles for hail, and convective storm.
Global catastrophe events which have produced insured losses of $25bn to $30bn are not expected to have a meaningful impact on the overall market surplus, which currently stands at over $750bn, according to USI.
Pricing pressure and tightening capacity will occur for certain US property markets and Lloyd’s syndicates that absorbed “a disproportionate share of losses”, the report noted.
These markets will likely reexamine their risk appetites and tolerance for certain classes going forward, and underwriters will have to cautiously asses high-hazard flood risk as a result.
USI also noted that cyber security is an escalating concern as it pertains to property coverage, as cyber-attacks that threaten to lead to product failure, theft of intellectual property and business interruption become common occurrences.
More broadly in the P&C market, most insureds will likely experience flat to +5 percent rate changes, depending on coverage line, programme structure, loss history and market appetite, USI said.
The broker also noted that that the pace of consolidation in the primary space will continue, but is unlikely to reduce competition in most lines next year.
USI identified challenges outside the property market including liability loss cost trends outpacing rate increases, which may be “unsustainable” long term, it said.
The continued unprofitability of commercial auto as multi-million dollar jury awards offset steadily rising premium rates will also continue to pose a challenge to the market next year, USI said.