Casualty International
Healthy appetite for casualty risks
The London Market currently has a healthy appetite for casualty risks outside the US, with recent new entrants into the international casualty market. Rates are currently flat and decreasing, with growing competition between the London and local markets.
Changes in policy terms and conditions
Policy wordings are expanding as the market softens. Sub limits for professional indemnity (PI), care, custody, or control (CCC), and product recall are being offered again. At the same time, underwriters are now more often requesting Perfluoroalkyl and Polyfluoroalkyl Substances (PFAS) exclusions.
Underwriting changes
Markel, a primary carrier with healthy growth aspirations has started underwriting international casualty in the London Market. Meanwhile, QBE has changed its underwriting philosophy and seems to be exerting more control over its underwriting strategy.
Notable claims
General inflation and more litigation activity by private equity firms are driving up awards and defence costs for insurers. The London Market is facing higher claims costs not only from US accounts, but also from accounts based in Australia, UK and France where litigation activity is also on the rise. Insurers are particularly concerned about the impact from US auto claims and Australian worker-to-worker claims.
Geographic/sector differences
Canada is currently a very competitive casualty insurance market with a large rate drop, led by local competition but also from the London Market. Insurers are concerned about worker-to-worker deductibles in Australia. Carriers are currently reviewing their US auto exposures and attachment points for all markets.
Outlook
Expected range in rate changes for the next 6 months for claims-free portfolios
Canada is currently the most competitive market for casualty risks.
Expected capacity change in the next 6 months for claims-free portfolios
Rising capacity is causing rates to decrease, but underwriters are still trying to achieve topline targets.
Expected coverage change in the next 6 months for claims-free portfolios
Insurers are broadening policy wordings in a competitive market.
Canada is currently a very competitive casualty insurance market with a large rate drop, led by local competition but also from the London Market.
Emerging risks
Casualty underwriters are concerned about any US risk exposure and will carefully monitor claims developments in the region. Insurance buyers can expect PFAS exclusions at renewal. Furthermore, the wildfire risk is expanding to new areas in Canada and Europe that had limited exposure in the past.
Renewal recommendations
Good quality information is key to achieve a good result at policy renewal. Insurance buyers that are proactive and give markets enough time to review the data are likely to reach better results. Many insurers are looking for new business. Insurance buyers with better information readily available are likely to be offered more competitive terms.
For further information, please visit the Lockton Specialty page, or contact:
Liam Kent
Senior Vice President
E. liam.kent@lockton.com