Willis Group Holdings, the global insurance broker, expects insurance buyers will see a mix of rising and falling commercial Property/Casualty rates in 2013 as they face a complex marketplace that continues to defy the standard hard/soft market cycle. Modest rate increases in Casualty, Executive Risks and several specialty lines will be balanced by declining rates for non-catastrophe-exposed Property programs and other risk areas, according to Willis' 2013 Marketplace Realities report.
According to the report, insurance buyers with catastrophe (CAT)-exposed Property risks can expect flat renewals, while buyers with non-CAT exposed risks will experience decreases in the five to 10 percent range. Casualty lines are experiencing some upward movement and General Liability buyers are facing rate increases in the three to 7.5 percent range, with Excess rate increases running a higher on some programs, Willis projects. Price firming is expected to continue into 2013 for some specialty risks, including primary Directors & Officers Liability, Employment Practices Liability and some segments of Construction, according to Willis experts.
In the employee benefits space, employers are focused on elements of the health care reform law that will go into effect in the next few years. The cost of health insurance continues to rise as insurers pass down the cost of compliance, while organizations take aggressive steps to stem rising costs. Rate increase estimates for 2013 can be expected to approach 10 percent, according to Willis experts.
In introductory remarks, Willis Group Chairman and CEO Joe Plumeri noted that in the absence of strong macro trends, individual insurance buyers will be more impacted by micro trends that effect their specific industry, sub-industry and geographic region. “The key to success in a micro world is specialization, customization and individualization,” Plumeri said.
“Buyers are under the same pressure to protect themselves, their capital and assets by spending as little of that capital as they can,” Plumeri noted. “There are still big savings to be had, even in a market that is firming after years of soft rates. We just have to work a little harder and look a little deeper to find them,” Plumeri added.
Key Price Predictions for 2013
PROPERTY
Non-CAT Risks: -5% to -10%
CAT-Exposed Risks:Flat
CASUALTY General Liability: +3% to +7.5%
Umbrella: Flat to +7.5%
Excess: +2% to +15%
Workers' Comp: +2.5% to +7.5%; up to +20% in CA
Auto:+2% to +5%
EXECUTIVE RISKS
Directors & Officers: Flat to +10%
Errors & Omissions: +5% or more with good loss experience; +10 to +25% with poor loss experience
Employment Practices Liability: Flat to +10% Fiduciary: Flat to +15%
CYBER
Flat to -3%; more competitive for first-time buyers
BENEFITS
+8% to +10%
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].