Casualty US
Limited risk appetite and narrow coverage
The current risk appetite for US Casualty is currently somewhat limited in the London Market. Insurers who are interested in underwriting US Casualty will seek short limits with a high rate on line. Carriers are focusing on low excess of loss placements for risks with significant turnover or exposures to sectors frequently experiencing high losses. The London Market is competitive against US domestic insurers within the bottom quarter of the tower. Recently, the US domestic market has been more competitive towards the mid- to higher-end of the tower, however we are starting to see that gap shrink as US casualty losses continue to develop and reinsurance capacity is threatening to retract as we approach the end of year.
Changes in policy terms and conditions
Most of the Lockton policies follow the underlying umbrella which is set in the US. There are some common exclusions around risks related to Per- and polyfluoroalkyl substances (PFAS) and biometrics (voiceprints, fingerprints, retinal scans).
Underwriting changes
Some market players are retracting and Apollo and Canopius have reduced their line sizes and risk appetite. Rates are up c. 10% compared to the previous year and capacity is being reduced on average below USD 10m per carrier. Underwriters are focused on nuclear verdicts while automotive risks are driving sentiment in the US Casualty space, influencing insurers’ appetite and premium expectations. We’ve also seen new capacity emerge in Bermuda, namely First Speciality, Banyan Risk, as well as Relm and Rockstone in London.
Carriers are focusing on low excess of loss placements for risks with significant turnover or exposures to sectors frequently experiencing high losses.
Outlook
Expected range in rate changes for the next 6 months for claims-free portfolios
Rates are already up c. 10% compared to the previous year and capacity is being reduced on average below USD 10m per carrier.
Expected capacity change in the next 6 months for claims-free portfolios
Capacity is reducing due to unexpected losses. Single plaintiff losses have exceeded USD 100m and claims are settling far more quickly which is also causing a cashflow issue.
Expected coverage change in the next 6 months for claims-free portfolios
Underwriters are particularly concerned about risks related to PFAS, automotive, nuclear verdicts and exposure to biometric data.
The London Market is on average charging more than US domestic insurers and the Bermuda market, however we are starting to see that gap shrink as US casualty losses continue to develop and reinsurance capacity retracts.
Renewal recommendations
Start renewals early and obtain feedback from the global marketplace well in advance of the renewal. Be sure to select the insurers you would like to work with and build a relationship with them. A trusted relationship with partner insurers is essential to improve your insurance programme.
For further information, please contact:
James Pryke
Head of Placement
E: james.pryke@lockton.com
Jessica Cullen
Head of US Casualty Practice
E: jessica.cullen@lockton.com