Marketplace Realities: Predictions for the Season Ahead

Willis commercial rate predictions: 2014

Our new line-by-line price predictions for the insurance industry in North America coincide with the start of the baseball season, and along with baseball fans everywhere, we’re full of hope – in this case, that the marketplace will continue to improve for our clients.

That’s not to say we’re reporting ideal conditions in the new issue of Marketplace Realities. In some respects this is a story of bad news being good news. For many lines, rates are creeping up, but they’re not going up by as much as they were last year.

Even better, just before going to press we began seeing some bright news on the casualty side in the form of rate reductions in umbrella and excess programs. Best of all, property rates, which we predicted last fall were about to start falling, are indeed falling and we forecast further and steeper declines in the months ahead.


Speaking of property, we admit to a certain amount of pride in seeing our prediction from October come true. In our world, that amounts to something of a home run and we’re delighted to see our clients enjoy the outcome. We’re taking another big swing of the bat in anticipating further rate cuts: We expect property rates to fall by an average of 10–15% for non-catastrophe-exposed risks, while risks exposed to natural catastrophes such as hurricanes will likely decrease in the 7.5–12.5% range. The downward pressure is being driven by ample capacity, the absence of major catastrophe losses and revised catastrophe modeling, which is generating lower loss estimates for windstorm risk.


On the casualty side, Willis experts are seeing single-digit rate increases but also occasional decreases on umbrella and excess programs. Primary casualty rates are expected to range from flat to +7.5%, with umbrella casualty rates ranging from -5% to +5% and excess rates seeing changes of  -7.5% to +3.5%.

Workers’ Compensation

Workers’ Compensation is similarly experiencing a widening range, from -5% to +15%, with greater increases in states like California. While capacity remains abundant in the casualty market, uncertainty over the renewal of the federal terrorism insurance backstop (TRIPRA) remains the “gorilla in the room.”

Employee Benefits

In the employee benefits space, we’re calling for rate increases of 5–6% for organizations with self-insured plans, and increases of 9.5–10.5% for insured plans. Employers continue to struggle with the implementation of health care reform as mandated by the Patient Protection and Affordable Care Act (PPACA) and the related uncertainty in the marketplace due to delays with various aspects of the legislation, such as the employer mandate.

For more details, the report is waiting in your on-deck circle Meanwhile, we’re looking forward to working with our clients to take maximum advantage of this stable and in many ways improving marketplace environment. Play ball!

Guest blogger Matt KeepingGuest blogger Matt Keeping is Chief Placement Officer for Willis North America, based in New York. Matt has been in the insurance industry for 24 years, and at Willis since 2003.

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