That is according to Marsh in the annual US Insurance Market Report. The trend is expected to continue in 2016 with retail and healthcare bracing them selves for more disruptions.
Typical rate increases in the first half of 2015 for similar programs were 10% to 15% over the prior year. However, as the retail and health care sectors have experienced some of the costliest events, increases for similar year-over-year programs ranging from 45%-55% and 15%-25%, respectively.
Further Report Highlights
- Automobile liability remains among the most challenging of casualty areas; pricing generally increased in the low single digits in 2015 and is expected to do so again in 2016. Nearly half of all auto liability Marsh clients renewed with rate increases in the fourth quarter of 2015, with trucking exposures facing a particularly difficult market.
- The workers’ compensation market continues to improve, with generally favorable conditions for buyers. Guaranteed cost programs renewed on average flat to down 10% in the fourth quarter of 2015, while loss sensitive programs renewed on average with between 10% decreases to 5% increases.
- Despite significant global political turmoil and violence, political risk insurance rates generally declined in 2015 and are expected to do so again in 2016. Rates for foreign investment insurance generally fell 5% to 10% in the year, while rates for contract frustration insurance and non-payment insurance fell 5% on average.
- In the fourth quarter of 2015, the majority of Marsh’s airline clients renewed hull and liability policies with decreases of between 15% and 25%.
According to Marsh’s research, barring unforeseen events, ample capacity and competition are expected to continue to put near term downward pressure on insurance rates in major classes of commercial property/casualty business. However, industry developments, including recent earnings announcements, senior management changes and re-underwriting at several companies bear watching. Macro dynamics, including global economic, political, regulatory, technological, and environmental developments, are likely to affect the industry throughout the year.
As outlined in the report, in the fourth quarter of 2015, US commercial property insurance rates declined on average between 5% to 10% for non-catastrophe exposed risks and between 5% to 15% for moderately catastrophe-exposed risks. Likewise, US public company directors and officers (D&O) insurance rates were on average flat to down 10% in the quarter, while US commercial general liability rates on average renewed with between 10% decreases and 5% increases.
“With 2016 under way, the global insurance marketplace appears to be heading in the general direction of soft pricing, reflecting insurer capacity, competition, and relatively low catastrophe losses,” said Robert Bentley, president of Marsh’s US and Canada Division. “Now, however, is not the time to be complacent. Organizations need to stay abreast of the ever-changing marketplace and risk landscape, where new and emerging risks can quickly escalate if not properly managed.”
Marsh’s annual US Insurance Market Report provides detailed information on commercial insurance market trends and risk issues for all major classes of business and more than two dozen industry and specialty lines.
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