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Survey Report

Insurance Marketplace Realities 2023 Spring Update – Property

April 28, 2023

Pressure to obtain higher returns for deployment of catastrophe capacity/aggregate will drive premium increases for insureds while inflationary pressure, reinsurance optimization and persistent scrutiny on valuation of assets remain.
Property Risk and Insurance Solutions
Rate predictions: Property
Trend Range
Challenged occupancies Increase +25% to +40%
Non-challenged occupancies Increase +10% to +20%

The direct property marketplace will continue to experience the effects of reinsurance treaty renewal results.

  • Every insured will see continued pressure at renewal on rates, values and terms. The overall risk profile of the insured (cat/non-cat, loss free/heavy losses, etc.) will determine the overall impact.
  • With a prolonged reinsurance treaty season, insurers will further exacerbate the already hard market conditions.
  • While the changes to individual insurer treaties will be varied on a case-by-case basis, the consistent theme at January 1 was double-digit increases in both rate and retention, leaving insurers to determine how to pass along the results of their restructured treaty protection to individual insured while reviewing their 2023 strategy. This caused a significant delay in receiving terms for Q1 renewals and will have a similar effect as Q2 quotes, where Q2 quotes are provided on a more condensed timeframe.
  • With the dynamics of the current market conditions, insurers are seeing increased submission flow into the market. Underwriters have more ability to be selective on deals. Hence, we are seeing a flight to quality, where insurers are using the hardening market to housekeep existing portfolios prior to focusing on new business.
  • Given the challenging market conditions, insurers are being asked to provide several quote options, which has increased their workload and slowed down the response time.

Reductions in available catastrophe aggregates have led to insurers deploying wind and quake aggregates more judiciously where the largest return for their capital is available.

  • Insurers are looking to “optimize” their portfolio — meaning reduce their aggregate exposure to catastrophic perils, as well as ensuring they are receiving adequate returns for their limited amount of aggregate capital.
  • This is translating to clients with losses, large catastrophe exposure, or both, experiencing a combination of significant retention and rate adjustments at their 2023 property renewals.
  • The ongoing expectation for 2023 is for a continued reduction in capacity in high hazard Nat-Cat zones.
    • Insureds heavy in Tier 1 named windstorm (i.e., Florida) and/or CA earthquake are poised to be hit the hardest, especially if those accounts have suffered losses.
  • There is a concern, with limited aggregate available, that capacity for catastrophe risks may be fully deployed by midyear resulting in a shortage for Q3/4.
  • For shared and layered accounts, the buffer or excess layers where the insurable values continue to impact attachment points, both capacity and cost continue to be challenged. Larger excess layers continue to become more compressed to ensure completion, thus driving more premium into the lower layers.
  • Insureds have begun to investigate alternative self-insuring options to limit the trading of dollar practices of old. They are also reevaluating their historical conservative risk management philosophy to purchase less limit than in previous years to strike a balance between the cost efficiency of their spend and enough/adequate coverage in place.

Due to valuation concerns and continued outsized losses plaguing the property market because of inflation or underreporting, we are starting to see mandated coverage restrictions.

  • Valuations remain heavily scrutinized. Insurers are fully focused on ensuring valuations are correct in order to demonstrate to their reinsurers that their portfolio data is robust. We still face a global supply chain problem and high inflation that show little sign of abating. These factors have direct impact on how the insurers view the current property risk landscape and are driving insurers to take a hard look at replacement costs.
  • When there are loss expectancies greater than 12 months, coverage restriction may well limit recovery to the values reported and may not contemplate what happens in Year 2 of the loss.
  • Insureds will need to have an accurate view on their values, as this is the basis of understanding their overall risk profile. Insureds may find themselves under-funded for retained risk by not properly purchasing adequate cat cover or by improperly setting sublimits for key coverage elements.
    • Appraisals and other back-up data to confirm the statement of values should go a long way toward providing insurers with more confidence regarding value accuracy and a greater comfort level in assessing risk — and possibly removing the clauses mentioned above.
    • Insurers are doing their own bench testing of reported values to ensure that these values are in line with what they expect the replacement cost to be. If insurance companies do not agree with what is being reported on the statement of values, then they are likely to rate against their own values. This is putting pressure on premiums, as markets could be rating off values that are much higher than what is being reported.
  • Until out-of-date valuation information is corrected, insurers will continue to minimize exposure by implementing margin clauses, occurrence limit of liability and/or co-insurance endorsement while increasing premiums.
  • Complicating matters for buyers, the language in these clauses varies across the industry, leading to the potential for misunderstandings and conflicting interpretations.
  • Be wary of the way these margin clauses will affect coverage for various sectors, especially when statements of values are reflective of forward-looking estimates, or a "snapshot in time," such as average inventory.

Coverage is becoming narrower due to the capacity available to markets from their treaty reinsurance partners.

  • Deductible levels have not increased in tandem with inflation, but we are starting to see an emphasis on deductible “correction” for accounts where lower deductibles were historically maintained.
  • Maximum deductibles on catastrophe risks are being heavily scrutinized — if being offered at all.
  • Florida minimum deductibles and percentage deductibles are being highly scrutinized with pressure to increase.
  • Insurers continue to restrict many coverages previously offered, such as communicable disease, cyber and SRCC.
  • There is continued pressure to move from manuscript to insurer forms.

Non-Tier 1 catastrophe perils (aka “unmodeled CAT”) are becoming a focal point as freezes, historic rain and severe convective storms (SCS) have become large events of Q4 2022 and into Q1 2023.

  • Given the frequency of SCS and freezes that continue to plague the southern U.S. along with wildfire in the west, insurers 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.
  • Percentage deductibles and definitions for convective storm are becoming more commonplace.

Extensions of coverage that used to be market standard are being scrutinized during the underwriting process.

  • Coverage is tightening on extensions of coverage that underwriters feel they have a limited ability to price for, such as contingent time element, service interruption and ground up construction extensions.
  • As a result, sublimit reductions and/or exclusions are being imposed.
  • Better data relating to contingent exposures leads to better outcomes in retaining customary sublimits, i.e., name key customers and suppliers both direct and indirect.
  • Insurers 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.
  • Further explanation for why an insured may need certain coverage extensions is being required to continue to obtain these coverages.


  • The main reinsurance market driver continues to be the supply/demand imbalance caused by a significant overall capacity decrease in the property cat market, with inflation driving exposure growth and loss amplification.
  • Broadly speaking, the 1/1 treaty renewals for property cat were up at a risk-adjusted rate more than 40%. Insurer retentions in some instances more than doubled. With a lack of available additional limits, or availability at terms deemed economical, insurers were left with a choice of retaining more or writing less.
  • In many instances, insurers with additional available aggregate will see this aggregate used to address inflationary exposure growth.
  • These effects are likely to be felt throughout the balance of 2023. For now, all eyes are on the 4/1 treaty renewals, which tend to have a heavier focus on U.S. E&S insurers and what effect the outcome of these renewals will have. Florida is a particular focus in June.
  • The property fac market has a reduced appetite due to aggregate constraints and some minor withdrawals but remains largely stable.
  • With respect to the property fac market, the rating environment mirrors the direct market:
    • Non-challenged occupancies: +10% to +20%
    • Challenged occupancies: +25% to +40%

As a result of the current marketplace conditions, insureds should employ some key levers to help manage the process while leaning on the strength of trading relationships.

  • Insureds that have diversified their placement into the four different marketplaces will likely fare better given they have already reserved aggregate in multiple jurisdictions: U.S., London, Bermuda and facultative.
  • Insureds who use brokers with an adherence toward an industry-specialized view of risk will ensure a greater focus on controlling the deliverables for a specific segment of the marketplace.
  • Insureds need to develop a clear and concise story in their submission, including a summary of their methodology in updating their state in values. If values are perceived as inadequate, pricing will be more punitive.
  • It is extremely valuable for the markets to hear the insured’s story directly from the insured to differentiate their risk from the rest.
  • Insureds should be open to reviewing global programs in totality, with consideration given to pulling out of larger countries where the local market has not been affected by the U.S. treaty price and availability concerns (i.e., China, Brazil, South Africa and Australia). While local coverage may be less robust than the global program, securing DIC/DIL in the global master could help bridge any specific coverage gaps.


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

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