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Price relief for certain surplus and surplus rows

SAN DIEGO – Surplus and surplus insurance buyers will see continued rate hikes in 2022, after several years of rate hikes, but there will be some relief for pricing as an influx of capacity in the market leads to more competition.

Cyber ​​liability. and real estate disaster risks remain particularly challenging as insurance companies reduce margins, according to participants at the Wholesale & Specialty Insurance Association & # 39 ;s Annual Marketplace in San Diego last week.

Ida, the winter storm Uri and the music festival Astroworld tragedy – in addition to new risks from forest fires, losses of ransomware and the condominium market in Florida ̵

1; are among the factors that contribute to the overall continued fortification, said managers.

Loss cost trends from so-called Social inflation and nuclear rulings also show no signs of abating, as courts reopen from the pandemic, while rising inflation adds to the insurance company's claims costs, they said.

Davis Moore, CEO of WSIA and vice president of Amwin's brokerage firm in Los Angeles Angeles, said that the E&S market is growing and that notifications are still increasing as the standard market continues to reevaluate its operations and prices continue to stabilize across most lines.

"We continue to see markets adjust their capacity at a time when exposures are increasing, which "creating a bit of a challenge for supply and demand," said Moore. [19659002] "The good news is that we are seeing new capacity enter the market to fill some of the gaps created when carriers reduce their capacity," he said. offices amounted to $ 24.04 billion in the first half of 2021, an increase of 21.9% from the same period last year, said Kansas City, Missouri-based WSIA in July.

Alan Jay Kaufman, President, President and CEO of HW. Kaufman Financial Group Inc. of Farmington Hills, Michigan, said ongoing losses from catastrophic events due to wind, water and forest fires will continue to drive real estate interest rate hikes.

Insurance companies have "shrunk which means they are holding back capacity or does not use the capacity to write business, which means that the market becomes more difficult, "said Kaufman.

" In the claims area, prices also continue to rise due to jury decisions. It is a very difficult environment, "he said.

But , except in disaster areas, next year's rate hikes will not be "even close to" where they were last year due to the inflow of capacity, he said.

Reduced limits price variations

For years ago, a broker could put together a large tower, whether property or accident, with just a handful of insurers, said Joel Cavaness, CEO of Rolling Meadows, Illinois-based Rice k Placement Services Inc., a unit of Arthur J. Gallagher & Co.

“Today you put together businesses with very small limits, stacking them on top of each other, which takes a lot of time. It also puts compression on pricing where people do not get paid for the capacity they provide ", said Mr. Cavaness.

Price increases will continue, but not at the levels seen in recent years, he said. A single-digit rate hike for better risks is in order, with a few exceptions, he said. Chairman of Jericho, New York-based wholesaler ARC Excess & Surplus LLC. To some extent, the prices of coastal properties have also increased.

"It is mixed. Everything does not go in the same direction. Prices generally on a mixed basis for insurance companies increase by 7% to 9% risk for risk", said Mr. Cavallaro.

For E&S property insurers, catastrophic property losses not only due to hurricanes but from convective storms, forest fires and freezes hit hard.

It's been a tough four years, says Ed Mazman, Boston-based vice president of the US Real Estate Unit. Ironshore Insurance Ltd., part of Liberty Mutual Insurance Co. "We get compound interest rate hikes and still profitability is being challenged because of all the different events," Mr. Mazman said.

he. Ironshore offers $ 5 million to $ 10 million in limits, sometimes higher, he said. President of Amwin's brokerage department.

"There is plenty of capacity out there, it's just at a price," said Mr. Drinkwater.

Insurance companies set much smaller limits. "It used to be that $ 25 million stocks were the norm. Now it's $ 10 million and often you have to build a $ 5 million stock program today in some more difficult classes," he said.

Moderate rate of increase

Ossot numbers are still increasing, but not as steeply as they were in the first half of 2021 and 2020, says Mike Brennan, CEO of CRC Group's commercial solutions business, based in Chicago.

"We do not see any operators ready to come in and distribute large limits for accidents, especially on lead umbrellas; $ 15 million is still uncommon in specialty stores, and $ 25 million is virtually non-existent, he said. "Significant judgments," said Brennan.

Excessive increases in general liability rates are still in the double-digit range, says Daniel Smyrl, executive vice president of underwriting at Admiral Insurance Group, a Berkley company, in Mount Laurel, New Jersey. "There is a need for capacity and limits, so people are willing to pay for it on the surplus side of responsibility." "From the primary point of view of damages, the market is still very stable, but not as solid as it was last year," said Rebecca Gitig, Los Angeles-based chief executive of US primary liability at Aspen Insurance Group.

expects it to remain stable going forward into 2022 but only at a slower pace, "said Gitig.

It's the same thing on the surplus side," said William McElroy, New York-based portfolio director, Injury, at Aspen. global victim portfolio has increased by about 15% compared to last year, which is much less than was the case in 2020. This is an indication of how underpriced part of the business was in the past, "said McElroy.

Aspen writes. 25 million "It is more like a maximum of $ 10 million," he said.

Capacity in the E&S sector for surplus accidents has decreased in recent years, says Adrien Robin son, Head of Global Specialty at Hartford Financial Services Group Inc.

"We I have always consciously limited capacity contributions and affiliations. "New opportunistic capital is entering the space that will add additional capacity to the sector," Robinson said.

Cyber ​​remains an outlier

ranging from 60% to 100%, said Mr. Cavallaro.

Some insurance companies try to sublimate the coverage of ransomware, but there are other markets that do not limit it. "There are ways around it," he said. Cavallaro.

Cyber ​​is the fastest growing line of insurance, and "for many insurance companies, they are interested in the future and want to take market share first and understand the latter." said Rotem Iram, CEO and co-founder of cyber risk specialist At-Bay.

It has made cyber volatility even greater, Iram said. "Ransomware has increased significantly and it makes sense to change prices in 2021," he said.

But there has been some over-correction in the market to cover last year's losses. "There is an over-correction compared to where the risk lies. Most insurers will have a strong performance," said Iram.

Every primary insurer has reinsurance and it also plays a role in dictating pricing and terms, he said. [19659002]

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