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Survey Report

Insurance Marketplace Realities 2022 – Casualty

November 15, 2021

The commercial liability marketplace is stabilizing, helping create opportunities to introduce alternative carrier solutions and competition

Rate predictions

Rate predictions: Casualty
  Trend Range
General liability Increase (Purple triangle pointing up) +5% to +12.5% or more
Automobile liability Increase (Purple triangle pointing up) +5% to +15% or more
Workers compensation Neutral Decrease Increase (flat yellow line, arrow pointing up and down) -2% to +4%
Umbrella liability - High hazard Increase (Purple triangle pointing up) +10% to +30% or more
Umbrella liability - Low/moderate hazard Increase (Purple triangle pointing up) <+20%
Excess liability - High hazard Increase (Purple triangle pointing up) +15% to +30%
Excess liability - Low/moderate hazard Neutral increase (yellow line, purple triangle pointing up) Flat to +15%

Key takeaway

The commercial liability marketplace is stabilizing, most notably in lead umbrella and excess liability, helping create opportunities to introduce alternative carrier solutions and competition.

Stabilizing factors include new excess carrier entrants and capacity, increased deployment of available capacity and amended structures and attachment points.

  • Buyers have also reduced their costs by procuring less excess coverage and increasing their retentions.
  • We continue to see a two-tiered marketplace, where challenged classes and/or lower primary attachment points see greater increases.

Several broad factors continue to drive ongoing casualty rate increases.

  • Historical excess pricing methodologies — less applicable as increasing severity compels insurers to reevaluate excess liability rate adequacy
  • Carriers questioning and reevaluating reserve adequacy
  • Carriers asserting coverage limitations and changes in treatment of defense for high-hazard industries
  • A highly organized and heavily funded plaintiffs’ bar utilizing third-party litigation financing
  • Continuing liberal class action certifications
  • Social inflation
  • Jury pools desensitized to vast monetary values
  • Nuclear verdicts and catastrophic liability losses garnering significant punitive awards

Lead umbrella and excess liability renewals continue to experience year-on-year rate increases but these increases are decelerating.

  • The lead umbrella market has largely “corrected” itself over the last few renewal cycles with respect to pricing and attachment points. Most programs have now been exposed to the challenged market for multiple renewal cycles and, while buyers still face rate increases, pressure to completely overhaul structure has eased, and triple-digit rate increases have become rare.
  • The trend toward supported lead umbrella capacity (i.e., primary carriers deploying umbrella capacity on the same programs) continues and, while there is still a strong unsupported lead umbrella market, leveraging the less volatile primary lines, especially workers compensation, is common.
    • The trend may have reached its peak in 2019 and 2020, when the number of supported programs increased by double-digit percentages.
    • In Q2 2021, that percentage fell to single digits. Moving large and complex programs multiple times in a short period is not optimal.
  • Capacity is returning to the excess liability market.
    • Total available/advertised global capacity had declined from ~$2.2 billion in 2018 to $1.4 billion in 2021. Actual deployed capacity increased to ~$950 million, up from $690 million in early 2021 (based on Willis Towers Watson data and observations).
    • These increases have brought a new level of competition.
    • With more capacity in the high excess space, brokers are often finding capacity excess lines oversubscribed.
    • Carriers seeking to participate in the high excess capacity space are being asked to offer needed capacity on mid excess layers on a ventilated basis.
    • The more flexible carriers are with respect to attachment and capacity, the more likely they will be to secure lines in the more attractive capacity layers.
    • Carriers unwilling to participate in the lower layers have offered additional capacity or lowered their price.
  • Carriers reluctant to deploy their advertised capacity have begun to participate on various excess towers by offering larger limits.
    • While the jumbo layers of the past (i.e., $50 million – $75 million) are still uncommon, some carriers are beginning to deploy capacity throughout a tower, albeit in two to three tranches.
    • The net result has been reduced rate volatility in excess layers and, in some limited cases, rate reductions.
  • In 2020 and 2021, excess layers saw dramatic rate increases due to severe restrictions in deployed capacity combined with the higher minimum premium demands from non-incumbent carriers, particularly for buyers purchasing more than $100 million in excess limits. As these restrictions begin to loosen, we expect reduced pricing pressure.
  • Volatility within the excess liability space has been driven by significant increases in jury verdicts and, while the pandemic slowed this trend, we have seen verdicts pick up where they left off as courts begin to reopen.
  • Higher rate increases are most prevalent on programs with exiting capacity (lead or excess).
  • The best pricing and coverage (lead and excess) 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.
  • 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.
  • Communicable disease and COVID-19 exclusions are now commonplace but not uniform, creating further challenges in structuring excess liability towers.
  • Many clients have explored captive use.

Auto liability has remained unprofitable for insurers as claim payments remain on the rise. Insureds continue to see rate increases, program restrictions and restructuring of deductible thresholds.

  • While, in 2020, the commercial auto insurance segment posted its best underwriting result in a decade, a result of continued rate increases and a large drop in driving due to the coronavirus pandemic, the upward pressure on price remains.
  • Recently available data illustrates sources of this upward rate pressure:
    • The National Safety Council (NSC) estimate of total motor-vehicle deaths for the first six months of 2021 is 21,450, up 16% from 18,480 in 2020 and up 17% from 18,384 in 2019.
    • Mileage in the first six months of 2021 rebounded 13% from COVID lows in 2020 but still lags 2019 mileage by nearly 6%.
    • NSC’s current 2021 estimated rate of death on the roads is 1.43 per 100 million vehicle miles traveled, up 3% from 1.39 in 2020 and up 24% from 1.39 in 2019.
    • $241.9 billion - estimated cost of motor-vehicle deaths, injuries, and property damage in the first half of 2021.
  • 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.
    • Programs with a minimum $5 million CSL have increased by 15.2% over the past year (WTW data and observations).
  • Continued upward rate pressure has pushed insureds to reevaluate deductible thresholds, implement corridor deductibles or explore alternative risk transfer (ART) solutions.
  • 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.
  • 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.
    • Being awake for at least 24 hours is equal to having a blood alcohol content of 0.10%. This is higher than the legal limit (0.08% BAC) in all states.
  • 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.
  • 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 beginning to see slight reductions, though many will still pay modest increases. Carriers are still offsetting exposure-driven premium reductions brought on by pandemic-impacted payrolls to fund COVID-19 losses from high-severity employers.   

  • National Council on Compensation Insurance (NCCI) reports that 2020’s net combined ratio for private carriers was 87, up from 85 in 2019 and 83 in 2018, marking the seventh consecutive year of underwriting gain, the fourth consecutive year of results under 90 and the third-lowest combined ratio since the 1930s.
    • Years 2018 to 2020 saw the lowest loss ratios in at least 30 years, with loss adjustment expenses (LAE) is at their lowest levels since the early 1990s.
  • 2020 net written premium for private carriers and state funds was down 10% from 2019’s $47.1 billion.
  • Workers compensation continues to be the casualty line with the most COVID-19 claim activity. NCCI’s 2021 State of the Line Guide highlights:
    • COVID-19 losses totaled $260 million for accident year 2020.
    • COVID-19 claims had an average severity of $6,000, with approximately 95% incurring losses less than $10,000, and approximately 60% incurring losses of less than $1,500. Most of these claims are indemnity-only or medical-only claims.
    • Claims over $100K accounted for approximately 1% of total COVID-19 claims but represented 60% of total COVID-19 losses.
    • Approximately 75% of COVID-19 claims included an indemnity component and were therefore lost-time claims, compared with approximately 25% of pre-pandemic claims.
    • Indemnity-only claims comprised a much larger portion of COVID-19 claims than for non-COVID-19 claims. These claims did not have any reported medical loss component. They probably involved claimants who tested positive but who may have been asymptomatic and therefore required no medical services.
    • The most severe claims included both an indemnity and medical component.
    • Healthcare and first responders accounted for almost 75% of all COVID-19 claims.
    • Other essential workers — mainly workers in restaurants, building operations, distribution systems and retail — accounted for an additional 15% of COVID-19 claims.
  • 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.
  • The circumstances around coverage are complex, vary by state, and are impacted by presumptive legislation.
  • 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.
  • 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, on the rise 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 is a key driver in mega claims.
  • NCCI reports:
    • Lost time claim frequency for accident year 2020 will be 7% lower than that of 2019, which was 4% lower than 2018.
    • The average indemnity cost per claim for accident year 2020 increased by 3% from 2019.
    • The average medical lost time claim severity for accident year 2020 will likely be plus or minus 2% compared to 2019.
  • While opioid use is declining, the problematic painkillers still account for close to 25% of workers compensation prescription dollars.

Buyers should focus on differentiating risks with the support of analytics.

  • As we continue to navigate this transitioning 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 as 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.


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 subsidiaries of Willis North America Inc., including Willis Towers Watson Northeast Inc. (in the United States) and Willis Canada, Inc.


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

Matthew Hannon
Head of Casualty Broking, West Region

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