Property and Casualty Rates Soft, But Aviation Rates Could Soar in 2015
By: Matthew Lerner (Business Insurance) October 2014
Commercial property and casualty rates will continue to be soft during 2015 as other lines like commercial aviation and in some cases cyber coverage could show strength, according to a new report released Tuesday by Willis Group Holdings P.L.C.
The report, Marketplace Realities 2015: Edge of a Cliff, says that while property rates will be off by 10%-15% on average for both noncatastrophe-exposed and catastrophe-exposed risks, casualty rates will range up or down 10% as “carriers continue to redefine their appetites” amid abundant capacity.
Commercial aviation markets, however, will head in the other direction due to “large industry losses [which] have put the brakes on several years of tumbling prices,” sending rates up 20% to 30%, Willis forecasts in its report.
Employee benefits markets will be split; those with self-insured plans are forecast to see 5% to 6% rate increases while rates are forecast to rise 9.5% to 10.5% for insured plans, according to Willis.
The market for cyber insurance “is largely favorable for most buyers, except for some “point of sale” retailers, where large losses have changed marketplace dynamics, and rates are expected to climb as much as 20%,” Willis said.
“With opportunistic capital continuing to show interest in the insurance sector, we wonder if the traditional cycles of hard and soft market might be changing,” Matt Keeping, chief placement officer of Willis North America, said in a statement.
Even a large event with insured losses of $50 billion might not turn the market, such are conditions, he added. “Absent such an event, we can easily imagine scenarios where rate softening accelerates and rates go over a cliff — or at least approach the edge,” said Mr. Keeping.
