Umbrella Market Trends: Q4 2013

Umbrella Liability: Q4 2013

Average umbrella rate changes are +2.8%  compared with +3.8% last quarter and +4.9% a year ago.

Umbrella Liability Market Rate Survey Distribution

Middle Market National Accounts Global Accounts
10% or more rate increase 2.2% 3.7% 0.0%
7.5% to 9.9% rate increase 3.3% 1.9% 4.2%
5% to 7.4% rate increase 18.7% 1.9% 4.2%
2.5% to 4.9% rate increase 28.6% 38.9% 33.3%
.01% to 2.4% rate increase 22.0% 29.6% 25.0%
Flat 20.9% 18.5% 25.0%
Down -.01% to -4.9% 3.3% 3.7% 4.2%
Down -5% to -9.9% 1.1% 1.9% 4.2%
Down -10% or more 0.0% 0.0% 0.0%
Average Rate Change Dec 2013 2.9% 2.2% 1.8%
Median Rate Change Dec 2013 2.8% 2.3% 1.9%
Average Rate Change Dec 2012 5.0% 4.3% 3.8%
Median Rate Change Dec 2012 4.2% 4.3% 4.0%

Umbrella Liability Average and median rate changes are down about 2 percentage points or more for all segments since December 2012, except for median middle market rate increases,  which are down about 1.4 percentage points.

Since the last quarter, umbrella rates changes are down more than 1 percentage point, with the median for global accounts dropping by 1.5 percentage points.

Reported rate changes were lowest for global accounts followed by national  accounts and then middle market, but average rates changes for all segments fell in a range of +1.8% to +2.9%.

Umbrella market rates have been increasing since December 2011 but rate increases appear to have continued the pull back we noted last quarter. Both middle market and large account distributions show the highest concentration of the rate change distribution at +2.5% to +5% but the concentration is a bit less for middle market than for large accounts. The rate distribution is not quite back to where it was in December 2011 but is approaching those levels.

Umbrella Liability Average Market Survey Rates

Industry Construction Real Estate Other
Mean 2.2% 4.1% 2.9%
Median 1.5% 4.7% 3.0%

This quarter, responses have flipped for construction and real estate. Rate changes reported for other industries have dropped by 1.3 to 1.6 percentage points from last quarter.  Construction rate changes have dropped 2 to 2.6 percentage points while real estate rates have risen 1.5 to 2 percentage points.

Average reported rate changes varied from a low of +2.1% in the Midwest to a high of +3.8% in the Atlantic North region. The Southwest and California both reported rate changes below the rest of their respective regions but these are based on a small sample size. The West region is showing the most improvement from last year, with all regions showing improvement. The Atlantic North showed the least change from December 2012.

Umbrella Liability Market Survey Rate Changes by Region

West average: 2.4% (down from last December’s average of 6.4%)

  • California average: 1.9%
  • Non-California West average: 2.7%

Midwest average: 2.1% (down from last December’s average of 5.7%)

South average: 2.8% (down from last December’s average of 4.9%)

  • Southeast average: 3.7%
  • Southwest average: 0.5%

New York Metro average: 3.1% (down from last December’s average of 3.7%)

Atlantic

  • Atlantic South average: 3.1% (down from last December’s average of 3.8%)
  • Atlantic North average: 3.8% (down from last December’s average of 3.9%)

About 30% of respondents again reported that umbrella underwriters are requiring higher underlying attachment levels.

Some of the underwriting concerns driving this are large auto fleets, real estate exposures, NY and residential construction exposures, and liquor liability exposure.  It is reported that underwriters are adding more exclusions to real estate-related umbrella placements. Wrap-up exclusions were cited as an example.

ACE, Swiss Re and AIG were mentioned as markets pushing for higher attachments. XL was cited as becoming more competitive for umbrellas.

Excess Liability Market Trends – December 2013

Reported excess Liability average rate increases are coming in lower than last quarter at +1.8% vs. 2.1%.  A year ago, the average reported rate changes were coming in at +3.6%. The sample is heavily weighted to middle market responses. Average reported rate changes for national and global accounts are now flat to below +1.0%.

Excess Liability Market Rate Survey Distribution

Middle Market National Accounts Global Accounts
10% or more rate increase 1.3% 0.0% 0.0%
7.5% to 9.9% rate increase 1.3% 2.0% 0.0%
5% to 7.4% rate increase 18.4% 3.9% 8.3%
2.5% to 4.9% rate increase 28.9% 19.6% 8.3%
.01% to 2.4% rate increase 13.2% 25.5% 25.0%
Flat 27.6% 35.3% 50.0%
Down -.01% to -4.9% 7.9% 7.8% 4.2%
Down -5% to -9.9% 1.3% 3.9% 4.2%
Down -10% or more 0.0% 2.0% 0.0%
Average Rate Change Dec 2013 2.4% 0.8% 0.7%
Median Rate Change Dec 2013 2.6% 0.2% 0.0%
Average Rate Change Dec 2012 3.9% 2.7% 1.3%
Median Rate Change Dec 2012 3.7% 2.4% 1.0%

Average excess liability rate increases are very close for construction and other industries with real estate reporting higher rates.

General Liability Average Market Survey Rates

Industry Construction Real Estate Other
Mean 1.7% 3.5% 1.5%
Median 0.0% 3.8% 1.3%

The Midwest region had the lowest reported rate increases this month. The Atlantic North reported the highest average excess rate changes this quarter.  Last year at this time, the West region report the highest average rate changes and NY Metro reported the lowest.  NY Metro was the only region reporting higher average excess rate changes compared with one year ago.

General Liability Market Survey Rate Changes by Region

West average: 1.5% (down from last December’s average of 5.3%)

  • California average: 1.4%
  • Non-California West average: 1.5%

Midwest average: 0.0% (down from last December’s average of 3.8%)

South average: 2.1% (down from last December’s average of 4.0%)

  • Southeast average: 2.6%
  • Southwest average: 0.4%

New York Metro average: 2.2% (up from last December’s average of 1.8%)

Atlantic

  • Atlantic South average: 2.1% (down from last December’s average of 3.3%)
  • Atlantic North average: 3.1% (down from last December’s average of 3.3%)

Capacity has not changed significantly since our last report.

About Pamela Ferrandino

Pam has been with Willis since 2004 and is Executive Vice President, National Practice Leader for Casualty, Placeme…
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