US P&C market more competitive than in recent years, says Lockton

Conditions across many major lines in the US, including D&O liability, cyber and umbrella/excess liability are better for buyers and more competitive than they have been in recent years, according to Lockton. “As we enter 2023, both uncertainty and opportunity remain. Absent cat-exposed property risks, however, most insurers are still looking to grow and compete for attractive risks. This can be a net positive for organisations that plan strategically amid upcoming renewals,” says the broker in its US Lockton Market Update: Property Challenges Largely Stable Market. But it notes that despite strong third-quarter results overall, healthy combined ratios and increases in net written premiums, US insurers are concerned about accumulating property catastrophe and automobile losses, as well as uncertainty about the reinsurance market. Lockton points out that property rate increases increased slightly in the second and third quarters of 2022, but are poised to accelerate post-Hurricane Ian. It adds that insurance buyers are seeing starkly different outcomes based on their loss profiles. “Insureds with heavy catastrophe exposure, tougher occupancies, poor loss histories, flat value submissions and poor risk prevention efforts are seen as bad risks for insurers, which are increasingly experiencing a flight to quality,” says the broker. “Insurance buyers should expect greater scrutiny and more difficult renewal discussions going forward. Buyers should be prepared for insurers to push for higher rates, higher deductibles, smaller sub-limits and changes to policy wording,” it adds. Liability insurers on the other hand have benefited from restructured books, exposure growth, and improving yields on new and rollover investments, the report says. Pricing increases have moderated and competition has returned, although Lockton notes that liability lines remain under pressure, with underwriters concerned about achieving and sustaining profitability. D&O pricing continued to fall in the third quarter of 2022, with many public company buyers able to secure even larger rate decreases at renewal than in the second quarter, says the broker. “Conditions for de-SPAC buyers are especially favourable, with underwriting capacity and competition growing for such risks. Pricing for traditional IPOs is also softening more than the market for mature public companies, in part because this segment had hardened more than the rest of the market in 2020 and 2021.” Conditions in the cyber insurance market are far more favourable than they were just a quarter ago, the report says, with insurers increasingly competing for risks as they focus on growth. Increases of 25% or less at renewal are achievable for many buyers. Indeed, some insureds may be able to secure flat renewals or slight rate decreases, depending on risk profiles, the cyber risk controls they have in place and whether they experienced substantial rate increases in 2021, according to Lockton, although it adds that this is an anomaly and not the norm for the significant majority of cyber insurance buyers. Lockton concludes: “Even as insurers increasingly compete for new business, they continue to scrutinise cybersecurity controls. Robust controls are expected to remain a prerequisite for insurance coverage for the foreseeable future.”

US P&C market more competitive than in recent years, says Lockton

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