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Amwins’ US report highlights ‘dynamic’ insurance market

The US property and casualty insurance market continues to be dynamic, with a deceleration in the rate environment in some areas but dramatic increases in others, according to Amwins.

“In many segments, carriers are becoming more comfortable with corrections made to capacity, pricing and terms, and are therefore looking to grow,” commented James Drinkwater, president of Amwins and Amwins Brokerage. “We continue to experience losses that are driving micro-hard markets throughout property, casualty and professional lines sectors. And while we’re seeing portions of the economy rebound from the pandemic, and life somewhat return to what we used to call ‘normal’, there remain exposures that retailers and insureds should be prepared for.”

The broker’s State of the Market report states that for property, “capacity remains sufficient with availability dependent on risk perception and rate”, adding: “While excess and surplus lines (E&S) carriers are more willing to entertain flat-to-10% rate increases in desirable classes, hard market conditions are still being seen in those less desirable.”

It goes on: “The remainder of 2021 will be a bellwether for cat-exposed business. This year has already been active in climate-driven claims, with wildfires reaching historic burn rates and 21 named storms predicted for 2021 – a more than 30% increase over average.”

For casualty business, the report notes that most excess carriers have maintained expiring limits and attachment points. However, to ensure pricing is in proportion to the inherent risk exposure, many carriers are looking for marginally increased rates over expiring, depending on the class of business, it says.

The report adds: “Currently, most carriers are comfortable with the excess capacity and the terms in which they are willing to offer coverage. And while we had expected the primary casualty market to start pushing rates, that has yet to happen outside of certain distressed areas. With the exception of certain verticals, carriers are looking to grow in the primary space, particularly in products liability. However, for carriers to expand in the primary GL space means creating more competition and tempering any rate increases they may be trying to achieve.”

Amwins warns that the post-pandemic environment may unleash a backlog of professional liability claims and coverage issues that the industry needs to prepare for. “All professional lines are feeling the effects of a hard insurance market. Cyber liability, however, has and continues to experience the greatest degree of change. In addition to facing increasing rates and more restrictive terms, buyers will be asked to demonstrate their commitment to cybersecurity risk mitigation as underwriters become more selective, declining and non-renewing risky accounts,” the report states.

As for D&O liability, while the line has experienced some degree of rate flattening, this could abruptly change as activity surrounding mergers and acquisitions and special purpose acquisition companies increase, says Amwins. “Moreover, the post-pandemic reopening of the judicial system may also become a potential driver of D&O claims. Additionally, a strong market outlook exists for reps and warranties liability, as struggling businesses in the wake of Covid-19 look to cash out, increasing the number of corporate transactions over the next several months,” the broker warns.

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