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Survey Report

Insurance Marketplace Realities 2023 – Domestic casualty

December 1, 2022

Workers compensation continues to provide underwriting profit, maintaining a steady primary casualty marketplace.
Rate predictions: Domestic casualty
Trend Range
General liability Increase (Purple triangle pointing up) Flat to +10%
Auto liability Increase (Purple triangle pointing up) +3% to +10%
Workers compensation Neutral decrease -5% to flat
Umbrella - High hazard Increase (Purple triangle pointing up) Flat to +10%
Umbrella - Low/moderate hazard Increase (Purple triangle pointing up) -2% to +5%
Excess liability - High hazard Increase (Purple triangle pointing up) Flat to +10%
Excess liability - Low/moderate hazard Increase (Purple triangle pointing up) -10% to +5%

Events outside of buyer control continue to drive casualty rate increases.

  • Inflation
    • Social inflation
    • Medical inflation
    • Wage inflation
    • Consumer Price Index inflation (driving revenues, but arguably not exposure)
  • Third-party litigation funding
  • Continued nuclear verdicts, especially with large punitive damage components

Factors leading to the deceleration of rate increases have become more prevalent and have drastically moderated rate over the course of 2022.

  • Workers compensation continuing as most profitable line of business for carriers.
  • Return of excess capacity with approximately $300 million additional limit available versus 2020.
  • Pricing adequacy of smaller lines within excess liability.

Auto liability continues to be a driving force behind the unprofitability of casualty insurers. While “forced” program restructuring has curtailed since drastic changes started in 2020, insureds continue to re-evaluate due to the reluctance of excess pricing and capacity.

  • Continued rate increases have yet to match the pace of trend/inflation increases needed to stabilize pricing.
  • The National Safety Council (NSC) estimate of total motor-vehicle deaths for the first six months of 2022 is 21,340, down 1% from 21,530 in 2021 but up 15% from 18,533 in 2020.
  • Mileage in the first six months of 2022 increased 2.8% from 2021 and was up 15.9% from 2020, showing the full rebound from COVID-19.
  • The estimated mileage death rate in the first half of 2022 is 1.34 deaths per 100 million vehicle miles traveled, down 3.6% from 1.39 in 2021 and down 0.7% from 1.35 in 2020. However, the mileage death rate is still up 16.5% from pre-COVID normal in 2019 (1.15).
  • In 2020 a total of 4,965 people died in large-truck crashes, up 31% since 2011 (71% of which were non-truck occupants).
  • Social inflation
    • Casualty Actuarial Society reports the effect of social inflation on commercial auto liability losses alone contributed $20 billion of losses between 2008 and 2019. Of this, $4 billion was an unexpected loss, and therefore not contemplated in loss development factors.
  • The increased frequency of oversized auto liability losses has resulted in lead umbrella markets continuing to increase attachment points on larger fleets.
    • While some were driven to take increased retentions or stretch the limits with higher retention in the primary and buffer layers of auto liability, others moved to fully fronted auto programs to maintain higher excess limits for balance sheet protection.
    • With reinsurance rates still rising, the increased limits offered by primary carriers to satisfy umbrella attachment demands could be more expensive going forward. The buffer market could be a solution as the surplus lines market loses market share to the direct retail markets.
    • Structured placements for larger auto fleets could be a better alternative when pricing approaches 50% or more of the buffer limit.

Workers compensation renewals are experiencing greater price reductions, driven to offset wage inflation, as well as carrier competition for a profitable line of business.

  • The National Council on Compensation Insurance (NCCI) reports 2021’s net combined ratio for private carriers was 87%, flat to 2020, marking the eighth consecutive year of underwriting gain, and five consecutive years of combined ratio under 90%.
    • 2021 accident-year loss ratio was at 102%, the first time above 100 since 2012, which is an early indication that soft pricing for workers compensation may be nearing an end.
    • 2021 wage inflation contributed 7.1% increase over 2020.
    • Reserves grew to $16 billion redundant at of the end of 2021.
    • Since 2012, the cumulative wage inflation of 35% affected indemnity claim severity.
  • COVID-19 claims for 2020 and 2021 have equated to approximately 80,000 claims for $630 million in losses.
    • 2% of COVID claims greater than $100,000 accounted for 66% of the losses, and nearly 50% of all COVID claims over $500,000 involved a death.
    • Healthcare and first responders continued to be the largest class of employee affected by COVID losses.

Umbrella and excess liability continue to contribute to a decelerating increase in rate trend.

  • With minimal exceptions, namely auto, lead umbrella has been corrected with reduced limits, higher attachment points and increased premiums. However, limited carrier appetite for lead umbrella has tempered competition in the space.
  • The 2022 trend of the “supported” umbrella of primary casualty has expanded into property, and other difficult-to-place lines of business.
  • Continued return of excess capacity.
    • Typically deployed excess global capacity reached a low of $690 million in 2021, up to $950 million in 2022 and likely approaching $1.2 billion for 2023.
    • Clients are often oversubscribed at the top of programs, driving competition, or allowing for additional limits to be purchased.
    • Carriers are consistently offering additional limits via ventilated structures, taking $5-15 million low in a program, and an additional $10 million or more near the top of a program structure.
    • Carriers unwilling to participate low in a program structure, must price more competitively to remain in a high-attachment-point-only program, as markets are leveraging their down low capacity and expanding into ventilated excess positions.
    • Carriers who entered the market only offering $5 million or $10 million, are being asked to stretch to $10 or $15 million to stave off competition for the layer. Lead limits on lower hazard risks are starting to increase again.
  • Re-opening of the courts will be closely monitored throughout 2023, as most expect to see speedy trials and rapid settlements favoring the plaintiff.
  • Softer-market conditions are returning, with more aggressive pricing coming from new carrier entrants to a program versus the incumbents.

Emerging coverage trends

  • PFAS/PFOA exposure under close scrutiny-limitations/exclusions is starting to appear higher in towers and some leads/primaries.
  • Limitations on Russia/Belarus are beginning to include limitations in Ukraine as well.
  • SML is still extremely limited.
  • Offshore punitive damages are growing in popularity as high-profile nuclear verdicts contain large punitive components.
    • Frequency of punitive awards have grown from 2% to 5% in the last four years.
    • In cases where punitive damages are sought, and case won, punitive damages are awarded 35.5% of the time.
    • Cases where compensatory exceeds $10 million and punitive damages are sought, they are awarded 82% of the time.


Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. 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 advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).


Senior Editor, Insurance Marketplace Realities
Head of Broking, North America

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