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Survey Report

Insurance Marketplace Realities 2022 Spring Update – Middle market

April 7, 2022

The middle market segment is starting to stabilize as many clients have already faced market corrections in recent cycles.
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Rate predictions: Middle market

 
Trend Range
Favorable risks
Property
Increase (Purple triangle pointing up) +5% to +10%
General liability
Neutral increase (yellow line, purple triangle pointing up) Flat to +5%
Auto
Increase (Purple triangle pointing up) +5% to +10%
Workers compensation
Neutral increase (yellow line, purple triangle pointing up) Flat to +5%
Umbrella
Increase (Purple triangle pointing up) +5% to +10%
Excess
Increase (Purple triangle pointing up) +5% to +10%
Challenging risks
Property
Increase (Purple triangle pointing up) +10% to +15%
General liability
Increase (Purple triangle pointing up) +10% to +15%
Auto
Increase (Purple triangle pointing up) +15% to +25%
Workers compensation
Increase (Purple triangle pointing up) +5% to +10%
Umbrella
Increase (Purple triangle pointing up) +15% to +25%
Excess
Increase (Purple triangle pointing up) +15% to +25%

Key takeaway

The middle market segment is starting to stabilize as many clients have already faced market corrections in recent cycles. Expect to see a deceleration of rate increases and program structure changes for favorable risks. However, challenging conditions remain for adverse risks, which continue to experience rate increases; though, even for these buyers, increases are less steep.

Marketplace overview

  • Market corrections on rate, program structure and capacity have impacted most buyers.
  • Insureds with notable losses and heavy cat exposures and those in certain industry segments continue to be considered difficult risks. As before, tougher classes of business include habitational, transportation, healthcare, social services, hospitality, food and foundries.
  • Carriers have aggressive new business and retention goals, which are resulting in competitive outcomes on favorable business.
  • Despite the stabilization, carriers continue to carefully manage capacity, increase rates and issue non-renewals on challenging accounts.

Property

  • Property limits, including business interruption, are being closely examined by underwriters to ensure proper valuation.
  • Contingent business income coverage continues to see tighter underwriting guidelines and reduced limits.
  • Cat exposures (coastal, earthquake, flood, wildfires, wind) are harder to place. Capacity is being reduced and deductibles increased.
  • Convective storm deductibles are being added in states that previously did not have them — or these deductibles are being increased.
  • Additional exclusions for civil commotion and riots are being seen on some hospitality, public entity, retail and real estate accounts.
  • Water damage coverage is seeing higher deductibles and lower sub-limits, and water damage mitigation is a focus.
  • Underwriters are focusing on accurate construction occupancy protection exposure (COPE) information, including age of roof.
  • Tougher property risks once written on a 100% single-carrier basis are being pushed to shared/layered programs.
  • Loss control visits are more frequently required prior to quoting.
  • Affirmative cyber peril and communicable disease exclusions are being applied on property policies.
  • Given the recent increase in vacant properties, carriers are focused on what protections are in place and close attention should be paid to vacancy clauses in policies.

General liability

  • Carriers are showing heightened concern about human trafficking exposures for hospitality and real estate accounts.
  • Sexual abuse and molestation coverage continues to see capacity reduction and scrutinized underwriting.
  • Most markets are no longer considering uncapped per-location aggregates.
  • Communicable disease exclusions are still being included.
  • PFAS (per- and polyfluoroalkyl substances) exclusions are starting to appear.

Automobile

  • Mono-line auto risks are extremely challenging to place and should always be leveraged with other lines of business.
  • Livery and ride-share exposures have become mandatory exclusions.
  • Hired and non-owned auto continues to be heavily underwritten, and buyers with higher exposure are not finding market interest.

Workers compensation

  • Infectious disease-related exposures are closely underwritten.
  • Remote working has created questions surrounding accurate payroll reporting, especially in monopolistic states, as coverage needs to be purchased through the state pools.
  • More underwriting scrutiny is being placed on accounts with exposures in tougher jurisdictions.

Umbrella and excess liability

  • Higher attachment points are being required by lead markets on both general liability and auto policies for most risks.
  • For tougher risks, buffer layers are increasingly being explored.
  • Markets have begun to deploy more capacity on both leads and excess.
  • Capacity for lead umbrellas has stabilized, and reductions in limits are less common.
  • Supported leads are more competitive, as carriers leverage primary lines with their umbrella capacity.
  • Risk purchasing groups are still an option, but underwriting guidelines are being tightened, and additional time is required for underwriting. Capacity is being reduced and insurers/reinsurers are changing frequently.
  • Clients continue to review contractual requirements and limits purchased.
  • Carriers are less willing to provide certain coverages, such as professional and sexual abuse/molestation.
  • Minimum premiums have increased significantly, driving pricing higher for excess layers.

COVID-19

  • Removal of communicable disease exclusions can be negotiated if proper COVID protocols are in place.
  • Carriers have begun to offer carve-backs to the communicable disease exclusion, providing coverage for non-pandemic-related communicable diseases.
  • Clients continue to navigate regulatory issues surrounding vaccine and mask requirements.
  • Carriers remain concerned with workers compensation exposures in states with presumptive rules.
  • As workers return to worksites, scrutiny is focused on increased exposures and the potential for increased loss activity.

Disclaimer

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).

Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for losses relating to the Ukraine conflict. 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 coverage relating to the Ukraine conflict. 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 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. -The Ukraine conflict 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.

Contacts

Deb Prince
Western U.S. Middle Market Broking Leader

Krista Cinotti
Head of Middle Market and Select, North America

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