A new macro insurance report from Willis Group Holdings found commercial insurance rates are dropping at a rapid rate and predicts they will continue to do so well into 2015.
Attributing the rate drops to the softening of the insurance market, where groups now compete with one another based purely on price rather than a multitude of other factors.
“For insurance buyers and risk professionals, now is the time to think about the strategic possibilities as renewals approach,” said Chief Placement Officer of Willis North America, Matt Keeping, in a press release.
Commercial casualty lines are expected to range between -10% and 10% for 2015, and commercial property rates, which have fallen for several quarters, in 2015 are expected to reduce by 10% to 15% for both catastrophe and non-catastrophe-exposed risks, according to the report.
“A mega disaster with insured losses of $50 billion, or even more, might not turn the market, with eager capacity flooding in to take advantage of what would normally be a rate hike following such a loss,” said Keeping. “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.”
Workers’ compensation is down across the country despite issues in some states such as New York, California, Pennsylvania and Massachusetts where increases up to 8 % are expected in 2015.
Increases are also expected to continue within aviation and cyber insurance. Those two markets are looking at dramatic increases next year, up by 20% at minimum, according to Willis Group.
Here are the key predictions from the Willis report for 2015:
PROPERTY
Non-CAT Risks: -10% to -15%
CAT-Exposed Risks: -10% to -15%
CASUALTY
General Liability: -10 to +10%
Umbrella/Excess: -10% to +5%
Workers’ Comp: -5% to +5%; up to +8% in CA
Auto: -10% to +10%
CYBER
-2% to +5%; Flat to 20% for POS retailers; more competitive for first-time buyers
AVIATION
Airlines: +20% to +30%
Aerospace: Flat to +10%
BENEFITS
Self-Insured plans: +5% to +6%
Insured plans: +9.5% to +10.5%
