Rates are set to increase on a number of casualty insurance lines affecting healthcare providers, including workers' compensation, healthcare professional, construction, and political risk and terrorism, according to insurance broker Willis.
But Willis also expects property rates to fall by an average of 10-12% for non-catastrophe-exposed risks, while risks exposed to natural catastrophes such as hurricanes will likely decrease by between 5% and 10%.
The forecast reflects a change since Willis published its spring edition of its report Marketplace Realities where modest decreases were expected for non-catastrophe exposed risks and rate increases were expected for catastrophe exposed accounts.
The downward pressure is being driven by an influx of alternative capital to the insurance industry, particularly the segment devoted to catastrophic property risk. For commercial casualty lines, buyers should expect a continuation of single-digit increases, with higher rate hikes in some states, such as California.
Overall, 14 insurance lines will likely see rate increases, while eight will see decreases, according to Willis experts. However, in many cases, the expected level of rate increase is moderate, and in some cases, predictions from the spring have reversed.
For errors & omissions and trade credit insurance, for example, spring predictions of increases have been supplanted by expectations of modest decreases or flat rates. Two exceptions are political risk and terrorism, where market hardening forces are gathering momentum.In introductory remarks in the report, Eric Joost, chief operating officer of Willis North America and senior editor of Marketplace Realities, addresses the controversy accompanying the new capital that is impacting the insurance marketplace.
“The reaction has not been all positive, to say the least, especially with respect to the new sources of capital,” Joost writes. However, he adds: “Some of this represents some real innovation – in an industry often criticized for conservatism and a lack of innovative progress.
“From our perspective we see clear benefits to these new vehicles, because our perspective is really that of our clients. For our clients – insurance buyers – the increase in supply of capital makes a more inviting marketplace.”
More certain, Joost says, is the reason for the evolution in the industry: “It's the advent of big data, insurance style – the increased access and ability to work with the data related to the possibilities of risk transfer.”
He notes that big data underpins the operation of WillPLACE, Willis's ground-breaking placement platform. He expects that: "Big data will be a source of much innovation in the years ahead."
rates, workers' compensation, healthcare professional, construction, and political risk and terrorism,