November 18, 2024
This will be the most valuable post on commercial insurance that you read this week.
I really don’t want to be the bearer of bad news, but as the resident insurance nerd I feel it’s time to say something…
Actually I’ve been saying it on every podcast I’ve recorded the past couple of months too [go listen to learn more about commercial insurance 🫡]
Better to be prepared than surprised, so here goes…
The same way we just witnessed a hard Property insurance market cycle, there have been leading indicators throughout 2024 that a hardening General Liability market cycle is next.
👉🏼 Marsh’s Global Insurance Market Index has now confirmed: commercial insurance rates during Q3 in the US were +3% with Casualty rates +10%
👉🏼 Reinsurers are seeking double digit rate hikes for US Casualty in 2025 renewals.
👉🏼 Along with rate hikes, reinsurers are looking to reduce US Casualty exposure, requiring more detailed data from cedants & reduce coverage limits [Does this SCREAM hard market to anyone?? It should]
👉🏼 Certain industries will be hit harder by increasing GL costs. Look out for Real Estate, Hospitality, Public Entity & Education.
👉🏼 Emerging liability risks in the US including those linked to microplastics, opioids & pfas are adding uncertainty for insurers & reinsurers.
What Does It Mean?
Don’t get caught off guard in the next hard market cycle. It’s not a maybe, it’s coming.
General Liability will be the next challenge. Hopefully your insurance team is already talking to you and strategizing for this.
Passive purchasers of insurance who are still buying ‘the old way’ will continue to be slammed with unexpected increases & shrunken capacity.
How Do We Fix It?
Tort reform could potentially curb the increased loss & nuclear verdict trend, but that doesn’t appear to be an immediate public policy priority.
Data data data + risk management. This will set operators apart from their peers.
It has never been more important to build a strong insurance team & have proactive SOPs surrounding insurance procurement/risk transfer.