Commercial P&C insurance marketplace remains hard, but better times ahead for buyers, says Willis Towers Watson

Insurance Marketplace Realities 2021 spring update: After a few year-on-year increases, rates approaching technical adequacy in some lines, sectors

ARLINGTON, Va., April 22, 2021 (GLOBE NEWSWIRE) -- North American commercial property & casualty (P&C) insurance buyers can expect an ever-so-slight turn for the better and a less difficult marketplace in the months ahead, according to Willis Towers Watson’s (NASDAQ: WLTW) 2021 Insurance Marketplace Realities report. However, the global advisory, broking and solutions company says buyers will continue to face upward pressure on pricing across most lines of business for the remainder of 2021, primarily due to increasing severity of losses that have been the main driver of the hard market.

The company offered some positive news for buyers in the report. Property increases are not as steep as predicted last fall. In fact, according to the report, increases are expected to be lower than predicted last fall for 10 lines of insurance and about the same as predicted for almost half the lines. Only a handful of lines are expected to see higher increases — and some of those just slightly higher. The report conveys that the market has become more orderly and predictable, with rates approaching technical adequacy in some lines and sectors, as new capital has entered the marketplace.

“With higher rates attracting new entrants and coaxing some capacity to come off the sidelines, rate increases are beginning to decelerate, or at least stop climbing,” said Joe Peiser, global head of Broking, Willis Towers Watson. “It’s still a hard market, but to a large degree, the hard/soft market cycle is — or will soon be — proven again.”

The company narrates that a two-tiered market has emerged — one for better risks, one for poorer ones — and anticipates each tier will pay more for insurance in 2021, but those in the better tier will suffer considerably less. While there are wide variations by product line, good risks are finding ease of conditions, including more modest rate increases; others, not so much. Strict underwriting and cautious deployment of capacity on certain risks persist as the underwriting community grapples with systemic changes in the risk landscape.