Rate predictions: International casualty
Despite outside pressures from related insurance markets and a complex global landscape, the international casualty marketplace remains relatively stable, with markets continuing to differentiate through notable investments in capabilities, data and resources.
The marketplace for international casualty for U.S.-based insureds remains healthy and competitive overall, with ample capacity to meet most of the insureds’ coverage needs.
- Elements of disruption observed in previous quarters in related lines of business have begun to subside, and data from recent renewals suggests that confidence and stability are trending upward once again.
- The multinational landscape remains a complex one, with the recent turmoil in Eastern Europe raising new questions about coverage availability and the movement of cash, i.e., premium and claim settlements. Given the fluid nature of events, insureds with impacted risks should examine options relating to how subsidiaries might participate in global programs and the location of premium collection, with discussions beginning as early as possible.
Premium rates are projected to remain flat, with understandable caveats for significant exposure changes, claim history and marketing frequency.
- Strategic and thoughtful pursuit of alternative quotes can help buyers achieve optimal results when partnering with carriers across multiple lines of business.
- With insureds reopening discussions about business expansion and growth projections, markets can expect organic premium to rebound toward pre-COVID volumes, which should mean less upward pressure on rates at renewals.
- Long-term rate agreements remain possible and can drive stable results, helping insureds operate within operating budgets.
- Seeking early commitment between all parties well prior to a renewal also helps achieve longer-term stability.
Exposure data requirements remain in place with an impact on policy language.
- While competition for market share remains healthy, carriers still require time and detailed exposure information in order to conduct thorough underwriting, something we suspect will continue. The risks entering the market from a number of industries continue to present new and evolving complexities, which has required carriers to make adjustments to policy language.
- For certain industries, particularly retail and manufacturing, exclusionary language related to per- and polyfluoroalkyl substances (PFAS) is becoming increasingly common. Insureds should anticipate discussions of their exposures and requests for additional exposure details.
- Certain industries are seeing more specific underwriting and policy language regarding emerging issues, such as sexual molestation and autonomous vehicles.
- Communicable disease remains an important issue across the marketplace for many industries and occupancies, with underwriters requiring information from insureds about safety precautions and company procedures addressing employee safety.
- Stand-alone coverage has become available for infectious disease liability, so far out of London with a claims-made trigger.
- Communicable disease exclusions remain common, though the exclusionary language is not consistent across the market, and with sufficient detailed information, underwriters may limit or remove the exclusionary language.
Program structure should be designed to respond to insureds’ business needs — beyond the need to pay claims.
- When considering the structure of an international program, decisions about where to issue local policies and the coverage/limits to be localized should consider future requests that insureds may receive from third parties to provide evidence of coverage. Pitfalls can be avoided by taking the time during renewal to examine the location of those contracted relationships and the coverage/limits that may be requested.
- Insureds are seeing more requests to evidence higher local limits than in the past. Most international casualty carriers can offer localized limits up to $10 million or even $20 million if needed, and it’s much easier to address program structure at renewal than mid-term.
- Buyers can often combine other coverage elements into a package including property coverage. In previous quarters, the property component came with challenges on rate as well as catastrophe coverage availability, but recent trends show improvement.
Buyers should coordinate the placement of international casualty with U.S. casualty and umbrella.
- Regardless of the size of the insured’s business overseas, the three separate casualty renewals (U.S., umbrella and international) should remain closely connected throughout the renewal process to prevent gaps and leverage premium spend.
- Risk managers should ensure coordination between the U.S. and international programs about occurrence and suit locations and coverage territory, as well as attachment strategy regarding excess limits.
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