The P&C insurance market is expected to continue softening after a relatively stable 2014, according to a report released by Marsh on Monday.
Those with commercial property insurance can expect to see competition for their policy this year (barring, of course, any major catastrophes), with rate reductions of anywhere from 5% to 15%. The report also noted that catastrophe-exposed clients can expected rate decreases of up to 15% this year, depending on their risk profile.
The casualty market, after a stable 2014 which saw a very slight increase in policies written, looks to soften in 2015. And the next 12 months look to be the first time since 2006 that workers’ comp might see profits, according to the report.
The cyber security market remains competitive and is one of the fastest growing insurance markets so far this year. The cyber market is expected to see continued increases in policies and possibly mirror the fourth quarter of 2014, which saw rate increases of 2% to 10%.
“Strong capital positions, ample capacity, and competition within the US property/casualty market are leading to favorable conditions for insureds, especially those with well-managed risks,” said Robert Bentley, president of Marsh’s US and Canada Division. “While this is good news, organizations need to remain vigilant in their efforts to stay abreast of the changing marketplace, where new and emerging risks can quickly escalate if not properly managed.”
Other notes from the report include:
- The release of the revised Fair Labor Standards Act regulation is likely to increase wage and hour claim filings, a key issue to watch in employment practices liability in 2015. Employers should pay special attention to changing laws in this area.
- The captive insurance market is expected to continue to grow this year; captive owners should be focused on evolving regulations in domiciles foreign and domestic.
- If oil prices hold steady at $60 or less, many energy companies are expected to reduce capital expenditures for exploration and production, especially in high-cost project areas such as deepwater drilling and Arctic exploration.
- With political risk insurance capacity at record levels, buyers in 2014 experienced generally favorable market conditions, which are expected to continue into 2015.
- Bankruptcies in the US retail sector caused some trade credit insurers to express concerns and take steps to reduce their exposure to that industry; however, there does not seem to be an effect on the overall market. In the fourth quarter of 2014, rates typically decreased 5% to 10%.