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Survey Report

Insurance Marketplace Realities 2023 - Property

December 1, 2022

Premium increases for most insureds will be driven by inflationary construction costs, heightened reinsurance pressures and possible catastrophe capacity constriction.
Property Risk and Insurance Solutions
Rate predictions: Property
  Trend Range
Cat-exposed Neutral increase (yellow line, purple triangle pointing up) +15% to +25%
Cat-free Neutral increase (yellow line, purple triangle pointing up) +10% to +15%

The direct property market continues to show rate lift, though the severity varies by industry segment.

  • Rate increases will continue to develop into 2023 for most insureds.
  • The market remains bifurcated, as underwriters continue to use a discriminating approach to risk selection and pricing.
  • Challenged occupancies, such as forest products, metals and minerals, frame habitational, and food and beverage, as well as loss-driven accounts and risks with a heavy catastrophe footprint will continue to see rate increases in the double-digit range.
  • Accounts that have performed well from a loss perspective combined with a solid risk management commitment have reached a level of rate adequacy.
  • Additionally, accounts that have monetized retentions to rid attritional loss frequency will find themselves in a more advantageous position.
  • The biggest hurdle for shared and layered accounts are the buffer or excess layers, where changes in the insurable values have now impacted attachment points, capacity and cost. Larger excess layers are becoming more compressed to ensure completion, thus driving more premium into the lower layers.
  • An increase in the number of insurers to complete these excess layers will only serve to keep rate increases afloat. Contradictorily, the primary layers on high quality accounts have become more and more competitive, and there is more capacity needed to complete many of the primaries on property programs.
  • CAT capacity may become more commoditized as deployment will be constricted and highly controlled.
  • Given the frequency of severe convective storms (SCS) that continue to plague the southern U.S., along with wildfire in the west, carriers will continue to scrutinize these exposures, with greater pressure to implement tornado/SCS/hail and wildfire percentage deductibles — though they are yet to be mandated across the board.

Valuation of assets continues to be the marquee issue for property insurance buyers.

  • There is no doubt that the property landscape remains awash in a world of unprecedented climate change-related natural disasters that have become more frequent and severe.
  • As the pandemic tries to wind itself down, we are still faced with a historic global supply chain problem and high inflation that shows little sign of abating. These factors have direct impact on how the insurers view the current property risk landscape and are driving carriers to take a hard look at replacement costs.
  • Replacement cost values are the basis of modeling on which property coverage decisions are made. Modeling outputs help risk professionals calculate limits, probable/maximum foreseeable losses, deductibles, business continuity planning, claim adjustment/payment and, ultimately, pricing.
  • Given the economic forces at work, buyers may find themselves underfunded for retained risk by not properly purchasing adequate cat cover or by improperly setting sublimits for key coverage elements.
  • Insurers are fully focused on ensuring that valuations are correct, as they in turn need to demonstrate to their reinsurers that their portfolio data is robust.

For those buyers perceived by the market as presenting inaccurate or out-of-date values, insurers are pushing intently for the inclusion of potentially claim limiting language, such an occurrence limit of liability clause or a margin clause.

  • These clauses are becoming commonplace as insurers address the risk of under valuation. Complicating matters for buyers, the language in these clauses varies across the industry, leading to the potential for misunderstandings and conflicting interpretations.
  • As a result, settling claims can become cumbersome. Buyers may wish, or in many cases, be compelled to get an independent appraisal.
  • Such appraisals should go a long way toward providing carriers with more confidence regarding value accuracy and a greater comfort level in assessing risk — and possibly removing the clauses mentioned above.

COVID-19 claims continue to be litigated, and a final outcome is still years out for many.

  • Insurers appear well reserved for these potential claims. Any further pricing impact on property policies from COVID-related issues appears to be in the rear-view mirror.
  • However, communicable disease exclusions have become standard, alongside cyber exclusions.

Contingent business interruption (CBI) exposures continue to concern underwriters due to continuing supply chain/logistics constraints, lack of exposure information and unexpected losses.

  • As a result, sublimit reductions are being imposed as well as requirements to fully name key customers and suppliers.
  • Better data relating to contingent exposures leads to better outcomes in retaining customary sublimits.
  • Underwriters will look for insurance buyers to provide copies of any disaster recovery or business continuity plans for review to understand makeup capability relative to CBI exposure.

Underwriters continue to push for the implementation of company/carrier policy forms in lieu of manuscript policies.

  • Carrier forms typically appear to be more standard in the single carrier universe but on large shared and layered accounts, the manuscript remains the most common approach.
  • In some cases, carriers will assert that a broader capacity offering can be garnered with a company/carrier form, but cracks in the armor are appearing.

2022 hurricane season update

  • Hurricane Ian was the second major hurricane of the 2022 Atlantic hurricane season, but the first to make U.S. landfall.
    • Landfall in Cayo Costa, FL as a Cat-4 hurricane with sustained winds of 150mph
    • Landfall in Georgetown, SC as a Cat-1 hurricane
    • Track shifted south and east, away from Tampa
  • Given the wide range of damage it is too early to make accurate determinations on possible lost estimates.
  • Building inflation and lack of qualified contractors may push the damages higher as the ability to re-construct will have a long timeline.
  • Ian is not expected to be a market changing event but will certainly generate conversation.


Inflation and increases in exposures are driving increases in reinsurance rates.

  • The reinsurance marketplace direction is clear: rate firming, withdrawal of capacity from catastrophe lines and many insurers having to take on more net positions than in previous years. Recent results have produced these estimates:
    • Property fac: +5% to +15% depending on historical and recent loss activity. Little to no new capacity but markets remain generally stable as respects aggregate deployment.
    • Property cat (occurrence): +5% to +20% (loss free), +20% to +40% (loss impacted); capacity exiting the market; reinsurers unwilling to do deals at market terms and overall lack of capacity to fill programs “at any price.”
    • Property cat (agg): +10% to +20% (loss free), +20% to +40% or more (loss impacted). Expiring capacity will continue to be tough to renew. Best-in-class clients are seeing aggregate limits shrink.
    • Property risk: +5% to +10% (loss free), +10 to +25% (loss impacted). The most stable piece of the market but continuing to harden, with reinsurers pushing on terms and conditions (lowering occurrence limits, removal of cat coverage, etc.).

Worldwide dedicated reinsurance capital declined about $40 billion in the past year ($475 billion in 2021 to $435 billion in2022) as modeled loss costs increased by some 20%.

  • The reinsurance market has created its own inflection point similar to what we saw around 2017. We expect higher treaty costs to be passed from insurers to their insureds as investors continue to push for profitability.
  • The industry-wide consensus is that this prolonged hardening of the market will continue for the next 12 to 18 months before leveling off.
  • Reinsurers will continue to steer away from cat volatility toward more risk-focused business that is diversified and stable.
  • Likewise, secondary perils and attritional cat have caused headaches for reinsurers and impacted profitability and earnings in recent years.
  • The retrocessional market has seen significant rate increases primarily due to a lack of capacity as demand clearly outweighs supply — adding further pressure on the re/insurance marketplace.
  • Major retrocession capital retreat has been occurring over the past quarter, which is expected to disrupt January 1 treaty renewals.
  • Many major reinsurers are signaling a hold on additional aggregate deployment in their 2023 plans. Given inflationary concerns and the current rating environment, there will be natural growth to their existing portfolio. This will exacerbate the flight to quality within the greater marketplace.
  • Significant flight to quality – meaning that insurers are using the hardening market to housekeep existing portfolios prior to focusing on new business. The flight to quality is also being seen in the MGA space, as (re)insurers are trimming delegated authority exposure. This is especially being felt in the regional MGA space.
  • The general sentiment of all this was discussed at the Monte Carlo Rendezvous which occurred in mid-September, and Baden-Baden which occurred in late October.

As a result, insurance buyers with loss-affected cat exposure should expect double-digit rate increases, though outcomes still vary by territory, occupancy, claim history and strength of trading relationship.

  • Increased submission flow into the market means underwriters have more ability to be selective on deals. Hence, we are seeing a flight to quality, where carriers are using the hardening market to housekeep existing portfolios prior to focusing on new business.
  • If values are perceived as being inadequate, pricing will be more punitive.
  • Terms and conditions are being reviewed with scrutiny.
  • Non-cat business that is loss-free can expect low to mid-single digit rate increases, driven by market competition.


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).


Scott C. Pizzi
Head of Property Broking, North America

Gary Marchitello
Chairperson of North American Property Practice

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