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The insurance market is expected to continue until next year



COLORADO SPRINGS, Colorado – The tough commercial insurance market over the past two years may have come from its peaks in many lines, but average interest rates are still expected to rise for the rest of 2021 and through 2022, say insurers and brokers. .

Continued disaster losses will drive further increases for many property policyholders, and although the pressure on liability lines has been alleviated by the closure of courts during the COVID-19 pandemic, interest rate increases for accident risks are still expected. [19659002] Estimates of the extent of interest rate increases vary, however, with some managers saying that averages are likely to be in single-digit percentages, while others still see double-digit increases going forward.

Tough lines, such as cyber responsibility, are likely to see stronger increases.

The executives met at the Insurance Leadership Forum, sponsored by the Council of Insurance Agents & Brokers, and held at The Broadmoor Resort in Colorado S prings, Colorado, earlier this month . The event was one of the first major insurance market meetings to return to a personal format since the beginning of the pandemic last year. Last year's meeting was practically held. The number of participants was significantly lower than in 201

9, but still 739 people from brokers, insurance companies and related companies participated in the meeting.

Insurance price increases have eased and are likely to be around 5% in the future, in addition to problem areas, such as property disaster and commercial liability, says Jeff Radke, CEO of Accelerant Ltd., a Bermuda-based insurer operating in partnership with managing general agents.

However, average rates do not decrease, he said.

"On the responsibility side, the old years continue to get worse," Radke said. "And all disasters really drive the real estate side." Accelerant, which was launched in Europe in 2018 and the United States this year, plans to begin operations in Canada next year, he said.

Prices have increased by double-digit percentages in many markets in recent years, but there is now more variation between sectors, says Tracy Ryan, Boston-based President, Global Risk Solutions North America, at Liberty Mutual Insurance Co.

a story for this market; there are many micro markets right now, she says.

For example, property rates are still rising, but the rate of increase is due to the catastrophic exposure to the property, Ryan said.

On average, interest rates rise by close to 10%, she said.

Last year, commercial properties / claims increased by an average of 17% and the increase was 14% during the first half of this year, says Kristof Terryn, CEO North America at Zurich Insurance Group Ltd. in Schaumburg, Illinois.

Increases in the frequency and severity of property disaster risks and the increase in secondary hazard losses, such as forest fires, are likely to continue to drive interest rate hikes, Terryn said. [19659002] In addition, while the increase in material costs may be facilitated when supply chain problems are resolved, the increased labor costs are likely to be permanent and will continue to drive up loss costs for insurers, he said.

"The market will hold tight for a while," said Terryn.

Prices will continue to rise, especially on hard lines, says Marc Orloff, President of North America for Liberty Mutual's global risk management business in Boston.

"Capacity is still compressed in the pockets of the debt market and some financial lines," he said.

And disaster-prone real estate deals will also see interest rate hikes. " it depends on the individual risk, "said Orloff.

While new capacity has entered the market," it has not been disruptive, it has been additive, "he said.

In professional responsibility, prices increase by about 5% compared to 2020 prices, says Robert Gadaleta, distribution manager for Hiscox USA in Atlanta, a unit of Hiscox Ltd.

Health care-related occupational injury accounts see larger interest rate increases as receivables and exposures from COVID-19 increase, he said.

The commercial truck sector, which has seen significant interest rate hikes for several years, remains fierce, says Jamie Reid, chairman of C3 Risk & Insurance Services, a privately held broker formed in San Diego 2017.

Insurance companies adjust the subscription based on individual accounts, and policyholders with "high-performing" accounts may see flat renewals or even some reductions, he said.

Policyholders w Reith say, however, that average or bad loss records are still rising, Reid says.

When the tough market comes out of its peak, there is more interest in alternative risk transfer structures in the market, says Bruce Denson Jr., president of Cobbs Allen in Birmingham, Alabama.

Alternative coverages for certain D&Os and regulatory risks generate interest, he said.

Cobbs Allen, who established CAC Specialty with the unit's management in 2019, expects to generate revenue of approximately $ 140 million this year from the combined brokers, up from $ 89.5 million last year as it continues to expand its operations, said Denson.

A growing business area for Liberty Mutual is shared economy risks, including ride-sharing companies, Ryan said.

The insurer combines teams with personal lin es experience and commercial linens experience to manage the business, she said.

“Getting the cars back on the road quickly is crucial, and that's a mindset that our personal line managers have. On the commercial lines, they understand the big boundaries, says Ryan. "It's a tough company and you have to understand the exposures."

Insurance companies are increasingly using digital platforms to write small commercial businesses, said several executives.

For example, Hiscox USA writes about 50% of its business digitally and about 85% of that business is written without human intervention, says Kevin Kerridge, White Plains, New York-based CEO of the unit. The digital business is largely for small businesses with less than $ 5 million in annual revenue, he said.

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