At the beginning of each year, we delve into the “Crystal Ball” and predict where the insurance market is going for the next year.

We have talked about the onset of the changing insurance market for several years now, and 2019 was when it really hit home; impacting virtually every line of property and casualty lines of business.

The Cause

Put simply, the foundation of the change in the market was largely reported as the big result of insurers paying out more in claims than the premiums they take in. This was an unsustainable business model, especially when ROI’s are not driving large multiples to offset it. We also feel that there is a lingering effect of some irresponsible underwriting over the past decade.

The Effect

Market cycles, or “corrections”, are common in many industries – and for the insurance industry, it’s resulting in three main areas of change: increased premiums, stricter underwriting rules, and reduced capacity (or an unwillingness to write business).

So if a ‘triple whammy’ wasn’t a thing before, it is now - “thanks insurance industry!” … said no one ever.

Some of the hardest hit industries continue to be transportation, hospitality, realty, and retail to name a few. However, virtually every industry sector and personal insurances have all felt the pinch and many large insurers are telling us not to expect the pressure on prices to ease up any time soon.

We do see a bit of light at the end of the tunnel though. For “Best In Class” business, we think we will see a leveling off of the drastic rate increases; being replaced by more predictable, low-single digit increases.

Cyber liability saw a huge spike in claims ratio from 22.3% in 2018 Q3 to 114.1% in 2019 – and continues to top the list as Risk Managers #1 concern, followed closely by Business Interruption.

General Liability Rates Increasing

There has been pressure on liability rates for some time, especially with claims in areas not as prevalent historically such as: psychological damage, concussions, post-traumatic stress disorder, and chronic pain. Illustrated by a greater representation of lawyers on files is the inflation in liability premiums.

Property Insurance

One trend of note in Q3 of 2019 was that there were marginally improved results in property lines – both personal and commercial – which should mean we will see a leveling out of increases in both of those areas of insurance.

Automobile Insurance

Claims ratios in the auto insurance sector continue to climb nationwide, led by an ongoing increase in personal auto claims payments. We hope that further increases will return to only single-digit increments going forward.

Directors & Officers Liability (D&O)

Following a prolonged flat-to-declining rate environment and an expansion of coverage for more than 10 years, Public, Private, and Not-For-Profit segments will see increased premiums this year. This is the result of higher claims frequency, severity, and increased loss costs.