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State of The Casualty Market SARIMS Presentation November 4, 2010. Derek Robinson, BCOMM, CRM Vice President, Regional Marketing Manager [email protected] 403-267-7813. State of the Primary Casualty Market. - PowerPoint PPT Presentation
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State of The Casualty Market
SARIMS PresentationNovember 4, 2010
Derek Robinson, BCOMM, CRM
Vice President, Regional Marketing [email protected]
2
State of the Primary Casualty Market
Insured's with good credit ratings, effective risk management programs and favorable loss experience are averaging flat to -5% rate reductions
In general, retentions have not retreated, however with the soft market coupled with an excellent loss record, clients should constantly review options for decreased loss retention levels
General Liability– Rates on risks with good loss experience are decreasing but significant exposure
decreases may reduce the ability to further cut rate.
Financial responsibility (fronting)– Very competitive particularly in competitive bidding situations
Workers’ Compensation (US)– Expect to see rate decreases ranging from flat to -5% as a result of competition and
favorable statutory changes
Risk transfer rates above client loss retentions for WC, GL and Auto continue to decrease through the third quarter
3
Casualty Lines Average Year Over Year Rate Change (through 9/30/10)
-14.0
-12.0
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10
% R
ate
Ch
ang
e
Workers Compensation General Liability Auto Liability
State of the Primary Casualty Market
4
State of the Umbrella/Excess Market
Pricing Beginning in 2009, rate reductions between -5% to -10% were replaced with
rate reductions in the range of -2% to -4% remaining in that range through the 3rd quarter of 2010.
– Markets have historically been aggressive to close out the 4th quarter on new business growth
Excess capacity carriers are strictly adhering to minimum premiums
Overall lead and excess layer pricing continues to be competitive but is certainly stabilizing
In 2011, most Insured's will see further premium reductions either due to reduced exposures or rate reductions
5
State of the Umbrella/Excess Market
Capacity Excess capacity has grown significantly in 2008/2009/2010 Currently, there is approximately $2 billion of total available capacity
0
20
40
60
80
100
120
Mill
ion
s
Insurance Carriers
2008/2009/2010 New/Addt'l Umbrella/Excess Capacity
New Capacity
6
State of the Umbrella/Excess Market
Umbrella/Excess Liability Average Year Over Year Rate Change (through 9/30/10)
-12.0
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10
% R
ate
Ch
an
ge
Lead Total Program
Global Risk Insight Platform (GRIP)
To further illustrate the discussion with fact based review, I have included some screen shots from Aon’s Proprietary GRIP system
– It provides real-time trade information broken down by line, industry and geography.
GRIP Slides
9
State of the Casualty Market ─ Summary
Category Rest of 2010 Comment
Pricing
Soft market conditions expected to continue with flat-to-low single digit rate decreases for low-to-medium hazard Insured's; increases will be pursued by carriers for more difficult classes where limited competition exists
LimitsMost Insured's expected to maintain excess casualty limits purchased
Deductibles/Retentions
Most Insured's expected to maintain deductibles/retentions
CoverageReasonable coverage enhancements expected to be available; underwriter scrutiny around emerging risks will continue
CapacityNo significant increase in capacity (currently at record levels)
State of The Casualty Market
SARIMS PresentationNovember 4, 2010
Derek Robinson, BCOMM, CRM
Vice President, Regional Marketing [email protected]
