Willis Towers Watson market report on US insurance renewal expectations

Willis Tower Watson's ("WTW") report "Insurance Marketplace Realities" serves as a guide for WTW's North American insurance buyers who are preparing for their upcoming renewals. For the first time ever, since first produced in 2016, "not a single line is predicting overall decreases" and "The overall trend is for increasing rates - Overall, 23 lines are expected to see price increases and five will see a mix of both increases and decreases (or flat renewals)."

WTW's report's opening summary suggests:

• firstly that "the pandemic and the resulting economic downturn will very likely extend the hard market through 2021. It may not expand it — rate increases for most lines may not increase further than they’ve been increasing for the past several months — but market discipline and upward rate pressure will continue as losses from the pandemic materialize and investment income deteriorates." and,
• secondly that "coverage terms and conditions, which had been relatively stable in 2019, are now under scrutiny — in some cases intense scrutiny."

We have compiled a "heat map" (available here as a downloadable pdf) to try and show the rates expectations compiled by WTW as an overall visual.

Remember that the rate increases mentioned are building upon earlier rate increases and in several classes the trend had already been accelerating upwards by the end of 2019. In 11 classes, Willis predicts steeper increases than it did in its 2020 report published in November 2019.

Offsetting the expected rate increases will be reductions in the values/exposures to be insured, e.g., business interruption values, cargo, payrolls, etc.

The full report is available by clicking here as a link to WTW's website - page to the bottom.

Other positives to take away mentioned in the report:

• that recent US states' efforts to retroactively re-write insurance contracts "would actually undermine the the entire foundation of our industry — mutual agreement on the terms of risk transfer," commenting further "We assume that, in the end, all parties would agree on the importance of upholding the sanctity of a contract, but it is a possible risk.";
• Very limited BI coverage, if any, under property policies, it is highly dependent on the specifics of each insured’s policy terms.
  

Separately, WTW's earlier presentation of 26 March to clients contains information by class of business (available by clicking here as a downloadable pdf) on COVID-19 coverage.