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Survey Report

Insurance Marketplace Realities 2021 Spring Update – Domestic casualty


April 15, 2021

Commercial liability marketplace has remained challenged. However there has been less volatility in recent umbrella and excess liability renewals.
Rate predictions
  Trend Range
General liability: Increase (Purple triangle pointing up) +7.5% to +15%
Automobile liability: Increase (Purple triangle pointing up) +8% to +15%
Workers compensation: Neutral decrease increase (green triangle pointing down, yellow line, purple triangle pointing up) Flat to +4%
Umbrella liability: High hazard Increase (Purple triangle pointing up) +50% or more
Umbrella liability: Low/moderate hazard Increase (Purple triangle pointing up) +30% or more
Excess liability: High hazard Increase (Purple triangle pointing up) +100% or more
Excess liability: Low/moderate hazard Increase (Purple triangle pointing up) +50% or more

Key takeaway

The commercial liability marketplace remains challenged. However, recent lead umbrella and excess liability renewal rates have been less volatile, a trend we expect to continue through 2021.

Focus should be on differentiating risks with the support of analytics.

  • As we continue to navigate this hard market, differentiating client risk profiles, exposures and loss experience is more important than ever. Analytic tools are crucial to these efforts and to identifying risk financing options.
  • Shifts in buying strategies and program structures are more commonplace today than at any time in recent memory. These changes demand risk quantification to help identify optimal program structures.

Several broad factors continue to drive rate increases in the casualty marketplace.

  • Liberal class action certifications
  • A highly organized and heavily funded plaintiffs’ bar that utilizes third-party litigation financing
  • Jury pools desensitized to vast monetary values
  • Carriers continuing to question and reevaluate reserve adequacy
  • Global umbrella/excess capacity reductions
  • Nuclear verdicts and catastrophic liability losses
  • Uptick in frequency of significant punitive awards
  • Coverage limitations and changes in treatment of defense for high-hazard industries
  • Historical excess pricing methodologies becoming less applicable as increasing severity compels insurers to reevaluate excess liability rate adequacy
  • Renewals taking much longer to complete, with participation from many more carriers needed to replicate expiring umbrella/excess capacity
  • Some buyers buying less excess coverage and increasing their retentions

Lead umbrella and excess liability renewals continue to experience year-on-year rate increases, with excess liability remaining the most disruptive casualty line. However, recent renewals suggest a deceleration in rate increases.

  • Most programs have now been exposed to the challenged market for two consecutive renewal cycles and, while buyers still face double-digit rate increases, pressure to completely overhaul structure has eased and triple-digit rate increases have become rare.
  • Total available/advertised global capacity has declined from $2.2 billion in 2018 to $1.4 billion in 2021 — although maximum deployed capacity is closer to $690 million.
  • Capacity reduction has three sources:
    • Carrier consolidation (approx. $235 million)
    • Carriers withdrawing capacity (approx. $500 million)
    • Underwriting restrictions (approx. $700 million)
  • New capacity has helped mitigate rate increases, a trend we started to see in Q4 2020.
  • Higher rate increases are most prevalent on programs with exiting capacity (lead or excess).
  • The best pricing and coverage have often been offered by long-term incumbent carriers. That will likely change once softer market conditions return and competition becomes more aggressive against incumbents.
  • Loss severity is increasing along with the proportion of claims that are litigated.
    • While we await the release of updated data, Lewis Brisbois (defense firm) reviewed the median value of the top 50 U.S. verdicts and 2019’s value was estimated to be $88 million, which would mark a 62% increase from :2018’s median value of $54.33 million and a 318% increase over 2014’s $27.7 million.
    • Severe recent verdicts have become the benchmark for future claims and are the result of aggressive litigation, litigation financing, changing jury sentiments and social inflation. Nuclear verdicts and large settlements, even in jurisdictions perceived as conservative, are another major driver of the current market.
  • Carriers are leveraging their lead umbrella and excess capacity to secure positions on primary casualty programs. Since Q2 2020 there has been a 15% increase in the number of buyers purchasing supported casualty programs (i.e., primary programs with umbrella/excess from the same insurer) and that trend is accelerating.
  • Excess liability insurers are imposing higher minimum premiums, citing increased cost-of-capital requirements. This has been a major driver of excess rate increases and has disproportionately affected clients who purchase more than $100 million in excess limits.
  • Underwriting and pricing guidelines remain fluid, with carriers continuously reacting to market conditions and, at times, changing their positions over the course of renewal discussions with insureds.
  • Communicable disease and specific COVID-19 exclusions are now commonplace but not uniform, creating further challenges in structuring excess liability towers.
  • Captives are being deployed to help manage excess rate, tower rate inversion (i.e., premium rates higher in upper tower layers than in lower) and non-conventional umbrella structures. Many captive owners are taking actions that put captive capital at risk to help manage a difficult marketplace.

Auto liability premium rates and claim payments remain on the rise, with some insureds being forced to amend program structure to manage total cost of risk.

  • Upward rate pressure is causing some insureds to reevaluate higher deductibles, implement corridor deductibles or explore alternative risk transfer (ART) solutions for their auto programs.
  • Recently available data illustrates sources of this upward rate pressure:
    • Advised data states that the median cost of a single fatality in 2019 was $5.1 million, up 14% from 2018 and up 182% over the past 10 years.
    • 2019 (per AM Best) was the worst underwriting accident year in a decade for automobile insurers, as losses reached $4 billion. Even with rate increases over the past several years, the 2019 combined ratio stood at 109.
  • As a result of increasing claim costs, umbrella carriers continue to demand higher attachment points, resulting in a stretching of primary limits or the introduction of excess buffers. Since 2018 there has been a 34% increase in the number of clients with $5 million in primary auto liability limits.
  • COVID-19 impact aside, increased frequency and severity of losses are the result of a multitude of factors, including more vehicles on the road covering more miles, distracted driving, rising medical expenses, commercial trucking driver shortages, legal climate changes, and decaying public infrastructure.
  • Risk managers recognize that drivers who text while operating a vehicle are 23 times more likely to become involved in a vehicle accident, so they are exploring risk control technology to help manage this exposure.
  • NHTSA data shows that more than 1,000 people are injured daily in accidents in which at least one driver was distracted.
  • Sleep apnea/deprivation continues to be a key factor in accidents, with over 43% of the workforce indicating they are sleep deprived. This is a major issue for risk managers, as employers have been found legally liable for not properly managing fatigue and sleep issues. 
    • The CDC states that 18 hours without sleep is the equivalent of driving with a blood-alcohol concentration (BAC) of 0.05%, while being awake for at least 24 hours is equal to having a BAC of .10%, which is higher than the U.S. legal limit of .08%.
  • Repurposing, a buzz word of the pandemic that came into currency as businesses modified job duties to meet changing demand, has impacted auto risks — e.g., in-house restaurant servers who are asked to deliver take-out orders using their own vehicles. Repurposing can raise the non-owned and hired exposure to both restaurant owners and their insurance carriers. Insureds should look at the employee’s personal auto policies to ensure that coverage under those policies would not be void in such circumstances.

Workers compensation renewals are experiencing flat to modest rate increases as carriers seek to offset exposure-driven premium reductions brought on by pandemic-impacted payrolls and to fund COVID-19 losses from high-severity employers. 

  • Workers compensation continues to be the casualty line of business with the most COVID-19 claim activity. The circumstances around coverage are complex, vary by state, and are impacted by presumptive legislation.
  • Many excess workers compensation policies were historically designed to include batch language for communicable disease claims. With the advent of Covid-19 this coverage enhancement has been limited and, in many cases, excluded.
  • COVID-19 has led to the deferral of elective treatments and medical care in general for non-acute conditions. This may extend the duration for non-COVID claims, putting upward pressure on costs.
  • The pandemic has reduced return-to-work opportunities and light-duty programs, which could also increase claim duration.
  • While less driving and more telecommuting may reduce the number of motor vehicle accidents, more ergonomic injuries may be expected as a larger percentage of the workforce is working remotely in spaces not designed for that purpose.
  • COVID-19 has created greater uncertainty in defining “the course and scope of employment” with many workers now telecommuting. Employers may have to add neighboring states to their policies, modify class codes, and establish guidelines and protocols for working from home.
  • A workplace outbreak of a communicable disease, such as COVID-19, is more likely to be covered by workers compensation if several factors are present:
    • Presumptive legislation creating a pathway for designated claims
    • An elevated risk of contracting the disease due to type of employment
    • Ease in identifying the time and place of disease transmission
    • State statutes and case precedents that favor workers compensation claimants
  • Telehealth, especially since the outbreak of the COVID-19 pandemic, continues to play a key role in workers compensation by providing more efficient access to high-quality medical care, mitigating medical expenses and lost time from work, and reducing claim severity.
  • New medical technology alone can inflate loss costs by 40% to 50% and are a key driver in mega claims.
  • Since 1999, indemnity claim severity has increased by 85%. This is consistent with the cumulative growth in wages of 78% over the same period. 
  • Recently available data from the National Council on Compensation Insurance (NCCI) shows:
    • 2019’s combined ratio for private carriers was 85, up from 83 in 2018, marking the sixth consecutive year of underwriting profit, and the third consecutive year of results under 90.
    • NCCI estimates that average indemnity claim severity for accident year 2019 was 4% higher than that for accident year 2018. The severity change is in line with the projected countrywide average wage increase for 2019.
  • While opioid use is declining, the problematic painkillers still account for close to 25% of workers compensation prescription dollars.


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Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include COVID-19 coverage. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. Some of the information in this publication may be compiled by third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort, or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates. COVID-19 is a rapidly evolving situation and changes are occurring frequently. Willis Towers Watson does not undertake to update the information included herein after the date of publication. Accordingly, readers should be aware that certain content may have changed since the date of this publication. Please reach out to the author or your Willis Towers Watson contact for more information.


Head of Broking, North America

Matthew Hannon
Head of Casualty Broking, West Region

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