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According to the report, in a traditional hard market, capital and consequently capacity are reduced, limiting the availability of insurance. But this marketplace is driven by the need for underwriters to make a profit underwriting versus relying on investment income. Carriers remain intensely focused on underwriting discipline, ensuring they secure the right terms and pricing on certain lines of coverage that have historically not performed from an underwriting standpoint.
Compounding factors that are driving this hard market include:
- A spike in large weather-related loss events/catastrophes.
- Historically low interest rates.
- Industry-wide rapid increases in Liability losses.
- Increases in the frequency and severity of ransomware claims.
- The global pandemic and resulting economic uncertainty.
Market Report Highlights:
According to Gallagher's Fall 2020 U.S. Market Conditions Report on client rate changes in the second quarter of 2020:
- 89% had a property rate increase, the highest number recorded since the early 2000s.
- 56% had a decrease in Workers' Compensation rates.
- 65% experienced an increase in General Liability.
- 78% had an Auto Liability increase.
- 76% saw an increase in Umbrella/Excess Liability rates.
- 100% had an increase to their Directors & Officers rate.
- Cyber policy rates increased by 5 to 20%.
To download the full report, visit https://www.ajg.com/us/news-and-insights/2020/oct/gallagher-2020-fall-insurance-market-update/.
Please note, data provided in this report includes averages and the variances we are seeing from the mean remain extreme. As we have outlined in previous market updates, a client's risk profile is the primary variable dictating renewal outcomes. Loss experience, industry, location and individual account nuances will also have a significant impact on these renewals.
630-229-3680 / Meghann_Dowd@ajg.com
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Gallagher provides insurance, risk management and consultation services for our clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance/risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general informational purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient's industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers control.
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