Property And Casualty Update US Market Update August 2018
Property and Casualty Update — USMarket Update August 2018The property and casualty (P&C) market has continued to expandwith the improving US economy. As the economy grows, manyindustries thrive and employment increases. This drives the needto protect additional risk leading to premium growth. Net writtenpremiums grew more in 2017 than in any year in the past decade,and this growth has continued into the first part of 2018.NET WRITTEN PREMIUM GROWTH (ALL P&C LINES):ANNUAL CHANGE, 2007-2017PropertyPage 3CasualtyPage 5SuretyPage 8Executive linesPage 8CyberPage 9HealthcarePage 96%5%4.6%4.2% 4.4% 314151617Net written premiums rose more in 2017 than in any year in the prior decade.Sources: A.M. Best (2007-2013), ISO (2014-2017)LOCKTONCOMPANIES
P&C MARKET UPDATE LOCKTON USAlthough there is growth in premium and exposures insured, carriers are experiencing pressure related to underwritingresults. In 2017, the P&C insurance industry profits were down 15.8 percent compared to 2016. This is largely drivenby significant catastrophic events last year.The industry reported a 103.7 combined ratio for 2017, the second highest since 2002. This means that insurers paidout more for claims than they collected as premium. With continued low interest rates hindering insurers’ investmentincome opportunities, industry results point to an inflection point and firmer market conditions.What exactly will happen in the marketplace is uncertain and hinges on a variety of factors, including the economyand future loss trends. Below is insight into what Lockton currently sees in the marketplace and projectionsabout what may happen if we continue on the current trajectory. We work closely with our clients to navigate thisuncertainty and make program adjustments as conditions warrant.P&C INSURANCE INDUSTRY COMBINED RATIO, 2001-2017*Higher CAT losses,shrinking reserve releases,toll of soft market.120Three consecutive yearsof U/W profits; first timesince 1971-73.115.8Heavy use ofreinsurancelowered net loses.110Secondworstcombinedratio s Mortgage & Financial Guaranty insurers 2008-2014.Including M&FG, 2008 105.1, 2009 100.7, 2010 102.4, 2011 108.1, 2012 103.2, 2013 96.1, 2014 97.0.Sources: A.M. Best; ISO, a Verisk Analytics company; I.I.I.2August 2018
P&C MARKET UPDATE LOCKTON USPropertyGeneralDespite poor underwriting results, the property market did not transition asmuch as expected after the catastrophe (CAT) losses from hurricanes andwildfires last year. Due to current capacity and the infusion of new capacityin the marketplace, carriers continue to struggle for desired rates. Theexception is for clients who experienced high CAT losses in 2017. In thesesituations, rate increases should be expected, but how much varies widelybased on the client’s loss history and risk profile.Natural disasters including flood, wind and hail losses continue to deterioratethe marketplace as carriers are asking for higher premiums and wind andhail deductibles in CAT-prone areas, especially those that experienced highcatastrophe losses last year, such as the US Gulf Coast, Caribbean, and partsof India and the Philippines. The California earthquake market continues tobe stable and unaffected given the lack of recent claim activity.What we are seeing related to rates varies widely based on a number offactors including CAT exposure, loss history, retention and programstructure. In general, assuming a benign storm season, we continue to expectthe following for property rates for the rest of 2018: Property accounts heavy with CAT losses: 10 to 20 percent increase. Property accounts with CAT exposure but minimal losses: 5 to highsingle-digit percent increase. Property accounts with low or no CAT exposure and no losses: Flat tolow single-digit percent increase.It is important for clients to start the renewal process as early as possible (wesuggest 120 days prior to expiration). This allows the client to understandtheir incumbent’s position and identify alternatives, if desired.3August 2018
P&C MARKET UPDATE LOCKTON USHere are exceptions we are seeing in the property market that aren’tLarge programs without significant loss history willfollowing the general update provided above.likely see rate reductions while policyholders with largelosses and CAT exposures will see increases. Capacity forReal estatewindstorm, flood and earthquake will remain in demand,While most segments in real estate have experiencedand the market will continue to try to push price. Unlessconditions similar to the larger property market,we see markets stepping out of energy or reducing theirthe exception is multifamily and hotels. This marketcapacity, the supply of capacity will continue to keep thecontinues to harden with some carriers not writingbrakes on any large increases in rate. However, if thecertain business. Some of this is because these classesyear becomes more active on the catastrophe front, someof real estate were hit particularly hard by the 2017carriers may re-examine their position in this space andcatastrophes.seek higher rates into 2019.Clients with significant loss history or exposures to wind,Cyber coverage within propertyhail and flood can expect rate increases, and those withVarious types of cyber coverage, including damage toproperties in Colorado, Oklahoma and Texas can expectdata and ensuing business interruption, denial of service,some of the highest increases. However, many carriersand off-premises data services, have frequently beenare raising property rates across the board for multifamilyincluded in property policies. However, we have recentlyand hotels. We expect these trends to continue and arestarted to see instances where first-party cyber coverageencouraging our clients to start the renewal process earlyhas transitioned from being part of property policiesto make sure that they have a good understanding of allto stand-alone cyber policies or being included in cyberof their property program options.liability coverage. The exposure related to cyber coveragein the property insurance marketplace is unclear becauseEnergythere is not currently credible loss history data, analyticsThe property market within the energy space was hitor modeling capabilities. This, along with recent sizableparticularly hard in 2017. In addition to a year withlosses, is contributing to market hesitation in providingmany catastrophe-related claims, the operational claimslarge amounts of cyber coverage.experience was high with a steady number of high-severityevents. As with the broader property and casualty market,We recommend that clients secure broad first- and third-combined ratios were above 100 percent. This resulted inparty cyber coverage in the insurance marketplace anda slightly destabilized market immediately after the 2017dovetail all cyber-related policies to prevent any potentialhurricanes, which produced a brief spike in rates at thegaps in coverage. Within the property insurance space, weend of 2017 and into early 2018. In Q2 2018, supply oncewill continue to pursue available first-party coverage foragain started to outdrive demand, so the market balancedbroad ensuing loss or damage coverage. In addition to aout and has returned to being relatively flat.coverage program, we recommend that clients implementa companywide education program concerningThroughout the rest of 2018, we anticipate the energycyber exposure to increase awareness and potentiallyproperty market to show flat to single-digit increases.minimize risk.4August 2018
P&C MARKET UPDATE LOCKTON USCasualtyIn general, the casualty market has experienced slight rate increases for liability, while workers’ compensationcontinues to provide clients with premium savings. This is largely driven by a market that remains well capitalized. Thecommercial auto market continues to experience substantial increases.The below table shows data from industry research through the first quarter of this year. We expect these rate trendsto continue at least through the end of this year. However, results are variable based on a client’s loss history, line ofbusiness and underlying exposure.Rate change for five major lines ranged from -2.0 to 7.7 percent in Q1 2018Commercial autoWorkers’ compensationGeneral liabilityUmbrellaFirst quarter 20187.7%-2.0%0.6%1.0%Fourth quarter 20177.3%-2.0%0.1%0.6%Third quarter 20177.3%-2.3%-0.8%-0.4%Second quarter 20176.1%-2.7%-2.7%-1.4%First quarter 20175.4%-1.9%-2.6%-1.1.%Source: The Council of Insurance Agents & Brokers. Chart prepared by Barclays Research.Commercial auto rates continue to rise.According to CIAB, Q1 2018 represented the27th consecutive quarter of rate increases forcommercial auto. These increases continue to bedriven by poor loss ratios. As mentioned in theFebruary Lockton Market Update, losses stemfrom sharp increases in both claim frequency andseverity. The trucking industry has experiencedrate increases for quite some time, but increasesare now extending to commercial fleets as awhole. Our experts recently updated the whitepaper on commercial auto to share additionalPREMIUM CHANGE FOR COMMERCIAL AUTO,2011-Q1 ource: https://www.ciab.com/download/14403/information about commercial auto rate changes.5August 2018
P&C MARKET UPDATE LOCKTON USOutside nonfood manufacturing, clients in all industriesWorkers’ compensationexperienced an increase in median price per million;Increased competition in this space has continued tononfood manufacturing held flat.result in flat to decreasing rates. For guaranteed-costprograms, Lockton saw renewals in Q1 2018 with aWhile the above updates apply to many industries and types ofmedian rate decrease of 4.9 percent. This is one of thebusiness, here are a few exceptions or issues of note we see in thelargest median decreases in the past four years. Loss-casualty space:sensitive programs remained flat in Q1 2018, which hasbeen consistent during the past 12 months where theNew York constructionmedian rate change has been -0.8 percent. We anticipateFor general and excess liability coverage, New York is thethese trends in workers’ compensation rates to continuemost difficult and expensive place in the country to placethrough 2018.insurance. This is because under current New York laborlaws, a worker who is injured by a fall from any heightOn the claims cost side of workers’ compensation,can recover damages from the owner’s/contractor’scompanies often look for opportunities to decrease theirliability policy on top of receiving workers’ compensationreport lag time as a way to decrease overall claims costs.benefits. Thus, rather than solely remedying injuriesRecent research conducted by Lockton’s Analytics teamvia workers’ compensation, an injured worker can alsoshows that solely focusing on lag time may not drivepotentially recover millions of dollars from the liabilityexpected results. For more information about report lagpolicy. Here are some important things to understand andand its relationship to claim costs, check out the Reportconsider related to general and excess liability coveragelag: Truths and myths white paper.for construction projects in the state of New York:Lockton’s Risk Control Services and Analytics teams partner with clients to understand root causes of variousInsurers are increasing rates and retentions ongeneral and excess liability coverage. These increasescost drivers and uncover practical solutions to improveare regardless of the insureds’ risk profiles orworkers’ compensation costs.loss histories.Umbrella and excess casualty Standard insurers have all but exited from the NewYork construction market.Pricing for full tower, which means lead umbrellaand excess policies rose slightly in Q1 2018. Lockton The high rates being charged have created thesaw median full-tower price per million increase byopportunity for excess and surplus insurers to enter1.8 percent. This reflects a lead umbrella marketplace thatthe market, and they are charging less. These loweris experiencing rising rates with an excess casualty marketrates often come with more restrictive policies andthat is nearly flat.a lot of exclusions that owners/contractors haven’thad before. These excess and surplus insurers mayIn Q1 2018, Lockton clients experienced a medianalso be more prone to quickly exit the market. It isprice increase per million on lead umbrella policies ofimportant for owners/contractors to understand2.3 percent, which is an upward trend from the pastnot only their own coverage but also that of their12 months where the median increase was 1 percent.subcontractors.6August 2018
P&C MARKET UPDATE LOCKTON USGlobalMost mid- to large-sized companies have an element of foreign exposure.Whether they have a physical presence outside the US or just have employeeswho travel internationally for work, ensuring coverage for third-party andauto liability as well as employee health and safety while outside the US issomething many companies need to consider.For companies with a physical presence outside the US, it is important tounderstand the nuances and opportunities in the global marketplace (see theFebruary Lockton Market Update for more details). Many companies wantthe same terms and conditions as their US casualty coverage, but this maynot always be possible based on in-country laws and conditions. Lockton canhelp clients understand what is common and appropriate by country and helpnavigate terms and conditions for international coverage.The foreign casualty market is profitable for carriers. As a result, there area lot of players and capacity in the market, so pricing is relatively soft. Ingeneral, we are seeing rates in this space flat to down 5 percent.Underground storage tank insurance clarificationOn Aug. 3, the Environmental Protection Agency clarified the regulations for insurance policies being used to satisfyunderground storage tank (UST) financial assurance. Among other items, the memo outlines that the EPA no longerconsiders policies including voluntary tank removal and voluntary site investigation exclusions as valid mechanisms tosatisfy the financial responsibility requirements of 40 CFR Part 280.The use of these exclusions is widespread across the UST insurance marketplace, and the effect of the clarificationsoutlined in the memo may have serious implications to those who rely upon UST insurance. Lockton is in frequentdiscussion with the insurance markets to assess how they are addressing these developments. If you think that yourUST coverage may include these exclusions, please contact Lockton to evaluate solutions.7August 2018
P&C MARKET UPDATE LOCKTON USSuretyWithin the US, both the contract and commercial surety markets remain competitive. This is largely driven by avibrant US construction market that is increasing the number of sureties, as well as abundant surety capacity. Thegrowth in the economy is expected to continue to bolster the commercial building sector into at least 2022. Thisgrowth has led to international surety players entering the US market, adding further capacity.As mentioned in the February Lockton Market Update, Lockton continues to monitor new entrants in the suretymarket, especially those that are growing quickly. Within a competitive market, it is important to work with carriersthat are upholding underwriting standards that ensure the longevity of their business and ultimately allow them todeliver on the terms and conditions of their policies.Outside the US, surety players are competing with banks to replace letters of credit or to offer international banksbackstop guarantees where surety bonds are not admissible. This means that established contractors with proven trackrecords now have the potential to reduce letter-of-credit obligations and free up cash collateral for operational use.In Australia, local sureties are restricted in capacity, especially for middle-market contractors. This is driving Australiancontractors to pursue US sureties (where capacity is plentiful) when working on contracts for the US governmentin Australia.Executive linesOverall, the directors and officers (D&O) and employment practices liability (EPL) markets have remained largelyunchanged since our last market update. However, here are a few notable developments and updates: Rates in the D&O market have been starting to trend up slightly during the last year. However, with the continuedincrease in capacity, we don’t anticipate these rate increases to hold into 2019. Claims related to initial public offerings (IPO) can now be filed in state courts; previously, they could be filed onlyin federal court. Not only could this result in more cases being filed, but it also creates more uncertainty sincestate courts don’t have experience handling these types of cases. This could drive up the overall costs of theseclaims, both from larger verdicts and higher defense costs. Over time, this could drive up rates or changes to termsand conditions for IPO coverages in D&O policies. The number of EPL claims related to sexual harassment has continued to increase. However, this hasn’t seemedto affect EPL rates thus far. In the crime marketplace, carriers are experiencing losses related to incidents outside the US. Thus, clients withsignificant foreign exposures will likely see pressure on rates.8August 2018
P&C MARKET UPDATE LOCKTON USCyberIn May, the European Union began enforcing new data protection rules known as General Data Protection Regulation(GDPR). The new regulations broaden the scope of what is considered personal data, and failing to comply with thenew regulations can result in potentially hefty monetary penalties. This may significantly increase the financial risk ofcompanies that conduct any sort of business in the EU, even if they don’t have a physical presence there.It is important for companies to understand GDPR, to make sure that they are taking appropriate measures toprotect personal data, and to examine their cyber liability policies to ensure that they are adequately protected froma potentially higher financial risk. For more information on GDPR, check out the GDPR white paper from one ofLockton’s cyber experts in the EU.HealthcareThe medical professional liability (MPL) marketcontinues to have plenty of capacity with supplyoutweighing demand. Thus, rates remain low, andin general, renewals are flat. One exception is in thesenior living market. Historically, the facilities haveexperienced favorable market conditions, but therehas recently been an increase in losses in this spacerelated to more claims and higher verdicts. This isdecreasing the profitability in this market, and withreserve releases almost depleted, carriers are startingto raise rates for senior living facilities.9August 2018
P&C MARKET UPDATE LOCKTON USThe property and casualty environment is currently a tale of two markets. On one hand, the market isgenerally well-capitalized and net written premiums continue to grow. Yet on the other hand, carriersare experiencing deteriorating underwriting results after years of competitive market conditionsand worsening loss trends. This creates a fair amount of uncertainty in the marketplace. Thus,Lockton recommends that clients begin the renewal process as early as possible. This allows time tounderstand the position of their current carriers and explore additional program strategies.10August 2018 2018 Lockton, Inc. All rights reserved.
to stand-alone cyber policies or being included in cyber liability coverage. The exposure related to cyber coverage in the property insurance marketplace is unclear because there is not currently credible loss history data, analytics or modeling capabilities. This, along with recent sizable losses, is contributing to market hesitation in providing large amounts of cyber coverage. We recommend .
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As of December 31, 9, 201there were 9companies licensed to sell property and casualty 41 insurance coverage and by the terms of sections 375.771 to 375.779, Revised Statutes of Missouri, all . Shelby Casualty Ins. Co. - TX . Vesta Fire Ins. Co. -TX : 2009 Park Avenue P&C Ins. Co.-OK . 2010 Imperial Casualty and Indemnity Co. - OK . 2011
Prelicensing Provider Exam Exams Given Exams Passed Exam Passing Ratio Examination Passing Ratio, by Prelicensing Provider and Exam A.D. Banker Corp Health 39 25 64% Life 178 118 66% Life & Health 236 163 69% Property & Casualty 301 165 55% Property 7 3 43% Adj. Property & Casualty w/ WC & Crop 10 0% Adj. Property & Casualty 20 0%
Property & Casualty Insurance Industry. PROPERTY & CASUALTY OVERVIEW . The U.S. P&C insurance industry recorded a net profit of 27 billion for the first half of 2020, a 23% decline compared to the prior year period due to lower investment returns resulting from
casualty develops progressive difficulty breathing, consider this a tension pneumothorax and perform a needle chest decompression. If no capability of NCD exists and the casualty continues to have progressive respiratory distress, . Tactical Combat Casualty Care Author:
Command and Control Mission Planning Considerations CHAPTER 6. CASUALTY EVACUATION OPERATIONS General Levels of Care Battlefield Casualty Evacuation Structure Utility and Cargo Helicopter Casualty Evacuation Capabilities Backhaul of Casualties During Air Assault Operations Casualty Evacuation Mission Planning Considerations CHAPTER 7.
TACTICAL COMBAT CASUALTY CARE (TCCC / TC3) ABBREVIATED TCCC GUIDELINES 31 JAN 2017 Return Fire and take cover Direct or expect casualty to remain engaged as a combatant if appropriate Direct casualty to move to cover and apply self-aid if able.
Tactical Combat Casualty Care (TCCC) based casualty cards, TCCC after action reports, and unit-based prehospital trauma registries need to be implemented globally and linked to the DoD Trauma Registry in a seamless manner that will optimize prehospital trauma care delivery.
