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Survey Report

Insurance Marketplace Realities 2020 – Personal Lines

Personal Lines

November 13, 2019

Rates are up across the board for personal lines, most significantly in cat-prone areas such as Florida and California.

We have included a section on personal lines insurance market conditions for this and future editions of Insurance Marketplace Realities. Results in the personal lines market are increasingly interwoven with the results of commercial insurers and impact their overall risk appetite. Furthermore, many of our commercial risk managers are involved with personal lines insurance for the executives of their firms.

Rate predictions
  Trend Range
Most risks Increase (pink triangle pointing upward) +5 to +7%
Cat-exposed Increase (pink triangle pointing upward) +15 to +50%
Cat-exposed with losses Increase (pink triangle pointing upward) +50 to +100%

Key takeaway

Rates are up across the board for personal lines, most significantly in cat-prone areas such as Florida and California.

Extreme weather patterns continue to plague the insurance industry with an increase in both frequency and severity.
  • After a quiet start, 2019 delivered Hurricane Dorian, the most powerful storm ever recorded in the Atlantic, exposing the risk that coastal communities face.
  • Wildfires increased 20% from 2017 to 2018; the 2018 wildfire season was the deadliest and most destructive ever recorded in California. Wildfires are now threatening communities all year long.
  • In 2018, nearly every state experienced at least one large hailstorm, with most hail events occurring in the Midwest states nicknamed Hail Alley.
Personal auto has shown signs of improved underwriting performance.
  • Rate action by many insurers in recent years is now helping to improve underwriting results.
  • However, the severity of claims continues to increase as technologically advanced vehicles become more expensive to repair and medical expenses swell.
  • As telematics become more sophisticated, we expect more accurate data on losses, leading to more effective preventive measures.
Analytics and technology will continue to impact underwriting.
  • Predictive modeling and greater access to data will continue to support underwriting discipline.
  • Insurers continually reevaluate their risk models, which tends to narrow their risk appetite and tolerance.
  • We expect more non-renewals and/or restrictive coverage terms as carriers continue to limit their overall downside.
  • Preventive measures will play a larger role in risk mitigation for all buyers.
High net worth (HNW)/family office clients will have particular challenges in 2020.
  • With market consolidations, fewer markets are catering to successful families.
  • HNW carriers will continue to introduce additional restrictions on policy language to limit their overall exposure.
  • Successful individuals tend to live in areas with more cat exposure, leaving them with fewer alternatives.
Related content tags, list of links Survey Report Personal Lines Insurance United States
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