Talk about a mixed bag. In the casualty marketplace, capacity is up, and that’s putting the brakes on rate increases—for some.
For others, especially if your product line is on the higher risk end of the spectrum, the news is not so good. In auto, the scramble for buffer layers that we’ve seen in the past year is easing. But in Workers’ Comp, the numbers coming out of California should give pause to risk managers everywhere. So, a mixed bag. Opportunities are out there, but you have to know where and how to look.
In California Comp, we’re seeing a notable uptick in loss frequency, especially in retail, hospitality and manufacturing. Why? We think it’s related to health care reform. We think that employers in those sectors are hoping to avoid the cost of health insurance for full-timers by adding part-time people. Total payroll stays about the same, but the number of workers rises, and with new people come more accidents due to inexperience. If the trend in California holds elsewhere—as it often does—look for Comp rates to follow upward.
In auto, the market is in a better place than it’s been in a while. Earlier in 2013, umbrella writers were raising attachment points. Primary writers (often the same as the umbrella writers) were not raising their limits. Buyers had to scramble for buffer layers to fill the gap. This year, some carriers are closing the gap themselves, and the buffer markets are better prepared.
Overall, the influx of capacity, always good news for buyers, is being carefully dispensed by carriers intent on picking and choosing industry segments where they want to specialize. They want to write more lines in those sectors at the expense of others.
The mixed marketplace we expect in 2014 deserves a good, close look. Know what you need, know how the marketplace perceives your business, and go out get the capacity that’s out there.
For more detail, see my video story on WillisTV.