Commercial Insurance Market Likely To Continue Hardening in 2021

North American commercial insurance buyers will continue to face hard market conditions through 2021 as rates continue to increase in almost every line, according to Willis Towers Watson (WTW).

In its 2021 Insurance Marketplace Realities report, WTW suggests that the most challenged lines will be property, umbrella, directors and officers (D&O), and fiduciary, with cyber not far behind.

"Barring another major insured catastrophe, we expect that property rate increases by mid-2021 will begin to moderate since underwriters will have had two cycles of rate increases by that point," the report said. WTW predicted 15–25 percent increases for nonchallenged properties in 2021.

While umbrella and D&O markets should become more predictable by mid-2021, rates will likely continue to increase, WTW said, though new capacity coming on line will likely have some moderating impact on those lines by midyear. WTW's predictions for 2021 umbrella insurance increases range from 30 percent for low/moderate hazard umbrella to 150 percent for high hazard excess. All categories of D&O are expected to face double-digit increases in 2021, some as high as 70 percent.

Cyber-insurance rates are expected to increase 10–30 percent in 2021, according to the WTW report. Meanwhile, general liability rates will increase 7.5–15 percent, WTW predicts.

Workers compensation rate decreases are flattening, according to WTW, with a slight increase now seen in response to high severity/excess losses. Workers compensation remains the casualty line with the most COVID-19 claim activity, WTW noted.

"We have to look back to the defining hard market crisis of the mid-1980s to see market conditions of the proportions we are currently experiencing—one of double- and triple-digit rate increases in most lines of business and dramatically reduced capacity in key lines," Joe Peiser, global head of Broking at Willis Towers Watson, said in a statement.

"However, our experience in this hard market is that there is a wide range of results; renewal results are not huddled around the mean," Mr. Peiser said. "This means underwriters are underwriting, and there is the opportunity to differentiate your risk."