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2021 State of the Market at a Glance - Casualty, Construction, ExecPro, Personal Lines, Property

Casualty ExecPro Professional Property Transportation Hospitality Public Entity Real Estate Energy Construction Management Liability Personal Lines

Will premiums increase? Are terms and conditions changing? What lines of business have limited markets? Which lines of business have excess capacity? Here’s what clients can expect in the marketplace for 2021 in a quick and easy to read reference guide.

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COMMERCIAL AUTO The commercial auto market is seeing an increase in frequency and severity of claims. Coverages are generally written on standard terms, but price increases will continue to be the norm. Good risks in any class can usually find insurance, but insureds can expect flat to double-digit increases. Rate increases will continue for average and below average business. If an account is well-placed in the standard market, it’s best to keep the account in the standard market even with rate increases because once an account moves to the E&S market, the price will go up significantly. Hired and non-owned standalone markets have gotten very expensive, and there are limited markets for waste haulers, dump trucks, and para transit accounts. CONSTRUCTION The Construction market varies by region, please see CRC Group’s Construction State of the Market at a Glance for details. Rates continue to increase and some carriers are reducing capacity. Contractor fleets also continue to impact rates. Emerging construction defect trends and employee injury verdicts are impacting carrier strategy. Many excess carriers are cutting capacity and increasing attachment points. ENVIRONMENTAL The environmental market has plenty of capacity and pricing remains stable. The market includes large, experienced carriers as well as numerous startup MGAs. However, there’s a wide variance in coverages and carrier appetites. Certain sectors and coverage lines are experiencing shifts. Site Pollution coverage, while remaining stable for pricing and coverages for most exposures, is hardening for hospitality, healthcare facilities, educational facilities, residential (condo, single-family, townhome), and certain multi-family exposures in large part due to mold losses. Retentions are increasing for mold coverage, but it’s still readily available. Contractor Pollution Liability and combined form PL/Professional products continue to be fast-growing with competitive options and pricing available. Combined form GL/Pollution remains competitive with some carriers offering Workers Compensation and Auto as companion coverages. HOSPITALITY - HOTELS & MOTELS This has been a difficult class of business and it was already tough to place non-franchise risks. Assault & Battery (A&B) limitations and/or exclusions were already an issue with this class and some carriers have exited the business altogether. The E&S markets had started to shy away even before the hotel industry was hit hard by the pandemic. An emerging issue in this space is the hotel-motel operators’ liability regarding human trafficking. There is major concern that the hotel-motel could be drawn into lawsuits from the victims. As admitted carriers continue to exit this space or have authority severely limited, accounts moved to the open brokerage market will see a significant increase in rate and often tighter coverage terms. Excess liability is seeing increases of 50% or more. HOSPITALITY - RESTAURANTS & BARS Increased assault and battery (A&B) claims and inflated verdicts/settlements have markets attaching A&B exclusions, limitations, and sub-limits, even on clean accounts - especially if they are liquor-driven. Communicable Disease/COVID exclusions are now being mandated. While many restaurants have taken in less revenue due to the pandemic, in many cases, premiums stayed level (meaning rate has increased). Moderate rate increases are being seen on the primary. Rates are even higher if insureds purchase over $5M as carriers cut capacity. Certain pockets will see larger increases or more restrictive terms. Liquor Liability in Alabama, Iowa, South Carolina, Pennsylvania, and Washington D.C. is more restrictive and more highly priced. In general, Florida rates are rising due to premises-operations claims. Florida also has a huge issue with shootings as the courts have upheld that a single shooting incident is not one occurrence, but one occurrence for each person shot. While there is no shortage of markets that can entertain the class, excess coverage capacity is being cut and driving up higher attachment points. Expect 50%-100% rate increases for excess with clean accounts seeing at least single-digit increases. Tower pricing will also increase if new carriers have to be inserted.

PRODUCTS LIABILITY The market continues to tighten with small single-digit rate increases. Carriers are more selectively choosing where to deploy capacity. As prices inch up, terms and conditions are also tightening. However, products liability is still a softer class. High- risk products like tires and trampolines remain expensive and are difficult products to place. Manufacturers of hover-boards, scooters, and electric skateboards are also tough and costly to place. Excess coverage over product liability is also tightening significantly and capacity continues to shrink. REAL ESTATE The GL market continues to be hard. At least single digit rate increases are expected. Insured’s with locations in high crime score areas are seeing a reduction in A&B limits and/or increased retentions. Coverage for subsidized housing remains especially tough, and markets accepting it typically allow no more than 15%-20% maximum. Underwriters are requiring habitational supplemental applications, a minimum of 5 years’ worth of currently valued loss runs (some up to 10 years), historical exposures and complete SOV’s with fire/life safety data. Metro areas in certain states including New York, Florida, and Georgia continue to see double digit rate increases. The excess market is especially hard, but additional players may enter the arena later in the year. Many accounts written in Q1-Q3 of 2020 had not yet experienced the massive rate increase that Q4 2020 accounts did, those accounts could see up to a 50% rate increases at renewal. Some carriers that previously offered a $10M lead in 2020 on larger schedules are now offering $2M-$3M in capacity or are requiring $2M attachment point and there are fewer carriers in the lead $5M space. Larger brokerage accounts are seeing $25K-$150K SIR with deductible buydowns needed. Anything under $100K in premium can expect $10K-$25K deductibles. TRUCKING - PRIMARY Primary trucking accounts are still seeing upward pressure on pricing, with 5%-25% increases in premiums, depending on the insurer and the territory. Better accounts are seeing low single digit to flat renewals. The market continues to be driven by high claims frequency and severity. Insurers are pushing rates more aggressively in states including Florida, Georgia, New York, New Jersey, California, Texas and Louisiana. However, some incumbent markets that were reluctant to renew accounts near expiring premium levels may be willing to write the business at sharply higher premiums. Distressed accounts will continue to be very challenging with high rates per unit. Preferred accounts that are performing well are still enjoying more competition within the existing price range as the competition is not aggressive enough to push rates lower. Competition is also growing for average and above-average accounts in the fleet and non-fleet segments. Some carriers are still exiting the standard market, particularly on a monoline basis, and others are only willing to write commercial auto as part of a wider program including Property, GL, or Workers Compensation lines. TRUCKING - EXCESS The excess and umbrella transportation segment continues to face challenges similar to years past, but now the impacts are more widespread and the effects are magnified with little sign of slowing down soon. Virtually all elements of excess fleet business – whether it’s contractors, for-hire truckers, commodity distributors, or others – will continue to feel the influence of brutal market conditions, namely slashed capacity and premium upticks on a bigger scale than previously seen. The largest increases remain in the buffer and lead layers for long haul, extra heavy truck tractor fleets along with those that have seen prior severity claims in the past 5-7 years. For accounts that have pierced the excess limit with a loss, management personnel at each carrier will be required to authorize terms and pricing. Underwriters are operating extremely cautiously when it comes to analyzing risk on an individual basis and deploying capacity on a portfolio level. They’re also quick to utilize facultative reinsurance, and those costs have increased exponentially to help fund rampant nuclear verdicts.

 

NORTHEAST The construction industry in New York City has primarily only E&S market options and remains difficult. Other areas in the Northeast, outside of New York City have access to a variety of market options. The markets participating in the Northeast E&S construction space have remained steady over the past several years. London continues to participate on a more selective basis, with higher premium requirements. Limited capacity is available for trade contractors on primary GL and lead excess. Estimated renewal exposures are down considerably for many NYC trade contractors, but losses continue to develop. Deposit premiums are now based on much higher rates due to the lower exposures. Despite lower exposure, carriers are maintaining high minimum premium requirements for more hazardous classes, including demolition, concrete, and steel. Construction in NYC has slowed down due to the pandemic and the mass exodus of people leaving the city. The first $5M buffer layer is tough to place with an inconsistent response from markets. CENTRAL Market conditions remain largely stable. In the Midwest, rates remain fairly inexpensive and aggressively priced with the exception of Cook County. As E&S markets diversify away from more construction defect prone jurisdictions, they are targeting this region for growth. But, with a steady admitted presence available, the prospect of meaningful surplus lines market share remains unlikely outside of urban, project specific placements. Residential appetite remains pretty limited - especially on Primary lines. In general, capacity reductions and pricing increases on excess placements are common, most notably with larger auto fleets. Louisiana remains a difficult legal environment with carriers actively shying away from specific venues within the state. Texas continues to become more of a consistent E&S state, with defect claims on the uptick, especially in major cities. Underwriting in the Southeast region of Texas is tightening due to action over claims and defect claims related to residential work. Price of Premium Less Expensive Very Expensive CRC Group’s State of the Market at a Glance was developed by surveying our nationwide network of industry specialists. 2021 STATE OF THE MARKET AT A GLANCE: CONSTRUCTION SOUTHEAST Markets are available for construction risks in most Southeastern states; however, contractor fleets are impacting rates. Florida and South Carolina continue to harden. They remain tough for residential contractors with construction defect litigation and claims driving prices and retentions up. Emerging construction defect trends outside of South Carolina and Florida are also impacting all accounts. The changes in Florida are substantial as markets exit, for both general contractors and residential subcontractors, which creates a capacity crunch for both GL and excess. More restrictive terms and conditions are also developing. Most other states will find standard markets available unless there have been losses. Excess carriers are cutting capacity and raising attachment points. Obtaining more than $10M in a lead layer is now considered exceptional. Supported excess pricing from standard markets is beginning to reach E&S pricing, which doesn’t necessarily mean it’s a fit for E&S markets. This sector is worth monitoring as it continues to evolve and become more challenging. WEST Carriers continue to adjust rates after years of soft market conditions and underperformance on the West Coast. The markets continue to re-underwrite their construction risks with increased rates and capacity reductions. Distressed placements with meaningful loss experience or vertical loss exposure can be victim to drastic adjustments with wildfire or auto sensitive placements seeing markups over 100%. Capacity for such accounts remains sporadic and increasingly expensive with no cost effective solution anticipated in the short term. Outside of the most volatile placements, carrier account selectivity remains the predominant narrative, leading to more accelerated deterioration in the most challenging classes, including residential exposures in construction defect states, wood frame, and street & road. With these tougher classes, 25%+ increases have continued, especially for larger placements where carrier willingness to discount rate relative to volume has diminished. While the excess marketplace was largely responsible for the turbulence of 2020, primary carriers began pushing for adjustments beginning in Q1 2021. Most notably in the wood-frame CIP marketplace where primary rates are trading 20% higher than in 2020. In addition to the wood-frame market, for-sale residential CIPS continue to attract limited capacity, with lead capacity becoming sparse and rates easily doubling those available in prior years.

 

ARCHITECTS & ENGINEERS While rates are continuing to rise, the firming of the A&E space is still primarily specific to geographic region, area of practice and claims history. There are better opportunities around middle market design firms with tough AOPs and/or claims history, but still plenty of program capacity for the smaller design firms. Rates are beginning to normalize in the middle market space and as of yet there is no new material exclusionary language and/or a pullback in coverage. A small number of insurers are exiting accounts or adjusting rates significantly on problematic disciplines or project types, resulting in some chaotic renewals including several with a 100% rate increase. Historically underpriced risks are now being hit hard with rate changes because other markets are not stepping into expiring pricing. Capacity is getting tighter for excess limits on practice or job specific bases with geotech, structural, and naval/marine continuing to be tough disciplines. Difficult project types include residential (especially condo), pool/community amenities, bridges, and amusement parks. Faulty workmanship is available in some markets, depending on class. Some insurers are also beginning to engage more risk management services pre and/or post binding on tough accounts. CRIME Prices are still relatively affordable in comparison to other Management Liability lines, however, if the Crime is packaged in with other management liability lines of coverage, it may be subject to the hardening market conditions D&O/EPL are facing, as carriers will try to apply an increase to the account as a whole. In such cases, monoline Crime placements might achieve better premium savings. Social Engineering coverage is widely available and consideration should be given to how best to coordinate Social Engineering extensions through Crime with the insured’s Cyber coverage. Cannabis, fintech, crypto and real estate (especially title/escrow agents) remain tough classes of business to place. There is still a lot of capacity in the US marketplace for Crime placements, and London has significant capacity as well. CYBER Rates are increasing due to loss frequency and severity, primarily driven by ransomware. Depending on class of business, many carriers are seeking 15-25% increases on renewals (25-45% on higher hazard classes) and tightening up underwriting around the insured’s security measures (i.e. MFA, open RDP ports). Markets are also concerned with aggregation issues that continue to arise from claims like Solarwinds and the new Microsoft issue. Each claim can affect tens of thousands of clients, exposing millions of limits with each event. Carriers are also now requiring ransomware supplemental questionnaires that provide specific information about protocols. Limits are being closely scrutinized, especially extortion coverage, and it is more difficult to obtain $10M with only one carrier. As the number of cyber incidents (i.e. ransomware, phishing, email compromise) increases, cyber incident response services remain a key selling point. PRIVATE/NON-PROFIT D&O The market has hardened, and it is anticipated that it will remain tight for the whole of 2021. Litigation and losses have prompted underwriters to limit capacity. Underwriters are also typically requiring full submissions with detailed, recent financials and COVID-19 questionnaires to explore how COVID-19 has impacted the insured’s financial status. Outside of pricing, brokers are seeing increased retentions and tightening around COVID, Anti-Trust, BIPA, TCPA or Bankruptcy/Creditor exclusions. The level of difficulty in placing business also depends on the class and/or exposure. Healthcare, hospitality, and accounts with financial distress are especially tough. New market entrants are being considered to evaluate their competitiveness. However, significant account movement isn’t anticipated, carriers aren’t currently pursuing business. Insurers are willing to walk away if they are unable to obtain desired rates, terms, and conditions.

PUBLIC D&O The Public D&O market, in particular the primary market, continues to remain hard largely due to an increase in exposure and lack of new primary capacity. After 4 consecutive years of above average frequency in securities action claims, there are hundreds of unresolved securities claims still in the pipeline. In addition, there was a record number of IPO’s fueled by 248 SPAC IPO’s in 2020, and 2021 is on pace to shatter that record. We have also seen an increase in the severity of claims and the cost of defense due to Cyan. Because of the hardening market carriers are raising both premium and SIR to historically high levels, decreasing capacity on individual accounts (in some cases cutting limits from$ 10M to 5M or less), and exiting certain classes of business including Life Science, IPO’s, and Automated Vehicles. However, several new markets led by experienced operators have entered the space (primarily in an excess capacity), and they’ll eventually begin quoting primary. E&O In comparison to the D&O market, E&O increases have been fairly stable with increases of 0 - 10%, depending on class, for most miscellaneous coverage. The sector has plenty of capacity, and there are no major shifts in coverage offerings. It remains a buyer’s market. Pricing and limits vary among industries. Pseudo-financial institutions (non-registered individuals), trustees, franchising, cannabis, debt collection, title agents, and entertainment business managers are still difficult to place. In addition, real estate, including property management risks, are getting tougher and seeing greater increases in both rates and retention. EPL The impact of trends including the #MeToo movement, ADA issues, and gender pay gap concerns continue to be felt across the marketplace. Rates have increased, and limits are dropping. Generally, renewal pricing is up anywhere from 10 - 30%; however, certain classes, venues, or claims-ridden accounts can expect even greater increases. Retentions are increasing as well as underwriters seek to “right-size” renewal retentions regardless of jurisdiction, claim activity, and class of business. Hospitality is a very difficult class, particularly for first time buyers, due to COVID concerns. In addition, car dealerships, entertainment, and financial institutions remain tough classes along with law firms, healthcare, and real estate. CA business continues to be a significant challenge with most carriers no longer writing in the state or requiring minimum retentions of $50K or more. It is also important to watch lay-off exclusions in the current COVID environment. FIDUCIARY LIABILITY FL is being impacted by an increase in the frequency and severity of Excessive Fee Litigation. This phenomenon has caused underwriters to review pricing. But, more importantly, retentions for Excessive Fee Litigation Coverage are coming in at $500K - $1M. So far, the market has not addressed this issue with exclusionary language, lower limits, or co-insurance, but the situation is being closely monitored for further changes. FINANCIAL INSTITUTIONS The exit of key carriers has impacted wholesale placements in the private fund and broker dealer space, resulting in retention increases for most FI classes. The Broker Dealer E&O market for small to mid-sized accounts is as hard as ever, with just a few domestic carriers considering new business. For all FI classes, it is important to obtain a complete submission up front as submission flow is elevated due to the harder market. Primary capacity is harder to find for most classes of lead FI professional liability, including Bankers Professional, Insurance Company Professional, Broker-Dealers and non-bank lenders liability. Asset Managers/Investment Advisors are slightly easier, but underwriting requirements have become more stringent, especially for Asset Managers with a concentration in real estate. Solutions can be found when bundling with D&O, and excess capacity is obtainable, even as rates as a percentage of primary continue to increase. New market entrants are assisting with excess capacity and helping to drive down increased limit factors (ILFs).

 

COASTAL After the most active Atlantic hurricane season on record, rates and wind deductibles are rising in most Gulf states, with the expectation that rates will be +25% higher than last year. Specifically, the Gulf Coast is seeing the market harden in the aftermath of Hurricane Zeta and the Texas Winter Storms. It’s anticipated that as carriers pull out of the region, aggregate availability will remain tight over the next 12 months. With limited market options, non-admitted carriers moving away from coastal risks, and some non-admitted products not renewing due to catastrophe management, the placement of larger TIV’s ($5M+) are becoming very difficult due to reduced market capacity. Lower valued risks, (under $1M, Cov. A), are also becoming more difficult to place, especially older construction (pre-1995). Generally, higher rates are being applied if a quote is obtainable at all. The Tri County region of South Florida is experiencing the highest rate increases and tighter underwriting restrictions. FLOOD Slight rate increases are anticipated on loss-free risks. Placement will be more challenging for negatively elevated risks, with higher premiums expected if terms are obtainable at all. Brokers are experiencing increased submission flow from agents for both primary and excess flood as more insureds become interested in the private market as opposed to FEMA/NFIP products. Recently, many Florida zones have been remapped, but the flood markets for Florida risks have remained fairly stable. However, West Coast Florida and Southwest Florida coastal risks can be more difficult to place on the primary flood side. HIGH VALUE HOMEOWNERS There are limited market options and capacity challenges in this sector, especially in the Florida and western states. Insureds are deciding to self-insure for wind coverage due to the lack of placement options and/or pricing, or writing the policies excluding wind with one market and writing the wind only portion with another market in Florida. Texas is also seeing a shift in the High Value Homeowners market with key players tightening their appetites and pulling out of areas including Dallas and North Texas due to loss experience. However, there are markets that will write in these areas and can round out high value homeowners’ accounts with monoline umbrella or personal articles policies. Pricing increases are becoming standard, and older homes (pre-1995) are experiencing the highest rate increases. In addition, previous mid-value markets have transitioned into HV only. Minimums start at $500,000 but can be as high as $1M on the Dwelling. LONDON MARKET Due to an active 2020 storm season, attritional losses and COVID impacts, rates are rising, capacity is shrinking, and guidelines are tightening as underwriting focuses on profitability. Contract renewals are requiring the entire renewal period, and capacity challenges are being experienced by all brokers. Authorities are being scaled back in some instances, and all syndicates expect a healthy rate on new business as well as rate increases on renewals - especially in coastal areas. New mandatory terms such as AOB and water sub-limits are becoming the new norm on older homes, or any home in certain territories such as the Tri County region of Florida. While the London market is seeing steady rate increases across many regions of the country, the Southeast and Mid-South are seeing some of the highest increases, especially in Florida. Price of Premium Less Expensive Very Expensive CRC Group’s State of the Market at a Glance was developed by surveying our nationwide network of industry specialists. 2021 STATE OF THE MARKET AT A GLANCE: PERSONAL LINES UMBRELLA There are currently fewer markets available in the space. Rate increases and tighter guidelines are anticipated. The aggregate loss history for both younger and elder drivers has reduced some carrier appetites for those specific risks, causing limits to drop. Brokers may need to engage several different carriers to achieve higher limits. WILDFIRE Over the last 5 years, carriers have taken catastrophic losses across the Western states due to an increased number of events of increasing size. Losses have driven rates up and carriers have pulled out of the class, increasing concentration for carriers still writing the business. Carriers are now limiting their TIV per risk. But, as more people move into these geographic locations, building costs are rising, which increases TIV even as carriers are decreasing the TIV per risk. In addition, underwriting is focusing more intensely on home factors in wildfire areas (i.e. roof, location, protection class, siding, proximity to brush/forests etc.).

 

ACTIVE ASSAILANT/TERRORISM Terrorism TRIA coverage is readily available domestically and through Lloyds. TRIA pricing is up 0%-5% and demand for coverage remains flat. Demand for Active Assailant coverage has increased by 200%-300% as risk managers use it to round out coverages due to increased security issues. Pricing for Active Assailant coverage is challenging, but capacity is good depending on class of business. BUILDERS RISK Capacity for wood frame projects (especially residential) is very tight due to the frequency and severity of fire and water damage losses, proximity to brush exposure (see wildfire info below), and civil unrest losses on larger city projects. Rates and deductibles are rising. Underwriters continue to scrutinize General Contractors. Gantt/Timeline Charts are commonly requested in addition to Line Item Budgets and Geotech reports. For structural renovation projects, engineering reports confirming soundness of existing structure is also a common requirement. Capacity for large renovation projects including the existing structure is at an all-time low, and may require blending “fixed property” markets and “inland marine” markets to achieve limits needed to adequately insure a renovation. Extensions are difficult to obtain and require data around the term/ length of project and plan for worst case scenarios. If/when capacity is lost, carriers coming in mid-term may charge back to the start of the project, which can be costly. It’s also not uncommon for incumbents to decline extensions, or re-write the rate, terms and deductibles when offering an extension. Ample market capacity remains for non-CAT superior construction builders risk projects. In addition, demand is high and supply is limited for both wood frame garden-style construction, and large podium construction projects. Only select carries are willing to offer meaningfully quota-share capacity. CAT WIND While 2020 saw significant rate increases and changes in terms, rate increases have normalized for most accounts. The market remains over capitalized with significant capacity to service most insureds. New entrants into the space are increasing competition, slowing down stabilizing rate increases, resulting in some flat renewals. The mid-market CAT Wind space is still dominated by MGA’s and MGU’s that continue to sign up new capital providers. It’s not uncommon to have larger shared and layered property placements oversubscribed by 150% with new E&S capacity as carriers and fronted reinsurance lean into the CAT Wind space. EARTHQUAKE Pricing continues to firm with companies seeking higher rate of return on capital deployed. Rate increase have normalized, and it’s not uncommon for incumbents to provide a 12.5% increase at renewal. It’s becoming more difficult to obtain capacity for older buildings (1950 or older), especially if historically designated. There are also more challenging pockets when it comes to capacity, including the Pacific Northwest and parts of Zone A (San Francisco and North Bay areas). In other areas, when competition is generated by thorough working the market, rate reductions are achievable on some accounts. MGA’s with large capacity are hungry for business and will compete to retain the right accounts. Select markets are agreeing to multi-year deals, which may indicate that rates have reached their peak, making underwriters more willing to lock accounts into a multi-year rate agreement. Earthquake insurance is extremely model driven, so accurate information properly coded into vendor modeling formats, including secondary modifiers, can significantly impact model results. Capacity for older construction in California and for “Tilt up” construction remains difficult. It’s still common to have a 5% deductible for California Earthquake, and options to buy earthquake deductibles down still exist in the E&S marketplace.

FLOOD There continues to be limited capacity for high-risk areas or those with previous flood history such as Houston, New Orleans, and many coastal locations. Flood insurance renewals are up 5%-10%. It can help to include flood in All Risk coverage because premium allocated for flood is usually less than stand-alone flood coverage. There is available capacity for smaller flood carve outs. On smaller flood risks, there is more competition in both primary and excess positions. Private primary flood markets can potentially offer competitive rates as well as improved coverage over the NFIP, including replacement cost valuation and business income, as well as the ability to write multiple locations on a single policy. When it comes to open market flood coverage, the more challenging occupancies include beverage distributors, condos over water, heavy machinery & equipment schedules, and accounts with significant Business Interruption exposure. Available capacity for accounts with negative elevation or history of flood claims is limited and more expensive. Carriers are typically holding their line size to $2.5M - $5M and prefer quota share. It can take up to 6-7 carriers to achieve a $25M limit. Rate increases on large flood renewals are typically between 10%-15% and usually require new capacity to bring renewals closer to 10%. Admitted/ direct carriers continue to re-evaluate and adjust risk tolerance for CAT exposures including flood, and we continue to see opportunities to build excess capacity over admitted/direct placements where the incumbent has cut back limits. HABITATIONAL/FRAME APARTMENTS Capacity is still thin, especially if risks include aluminum wiring (depending on remediation type more carriers open up) or if structures have Federal Pacific Stab-Lok breakers, which has become a big issue over the last 12-18 months. Carriers are still pushing rate and percentage wind/hail deductibles in convective storm areas where schedules include several roofs or 1 large roof exposure, as well as ensuring proper valuation. Rate increases are averaging 10%-40% or more. Very clean accounts can typically expect 9%-20% increases depending on location. Rate increases of 15%-40% in convective states, depending most on age and loss history, with older B & C apartments seeing the largest increases. For large schedules, it remains standard to see $100K-$250K AOP deductibles with “Plus Aggregate” retentions on placements with loss histories. ITV continues to be a sticking point for most markets, where once 75 PSF was required we are now seeing 90+. Areas with high wind and hail exposure such as Texas, Colorado, and Oklahoma continue to be tough to negotiate and place. The Texas Freeze Event (Uri) caused massive losses to many of the program markets that dominate this space. We expect to see higher rate increases in Texas, Oklahoma, Arkansas and Northern Louisiana. One-off frame locations also continue to be difficult placements. Agents should begin marketing strategy conversations as early as possible. Proper valuation continues to lead all underwriting conversations. HIGH HAZARD MANUFACTURING There is still limited capacity on a primary basis depending upon the occupancy. Markets continue to display strong underwriting discipline however, some carriers are deploying capacity where they declined to offer terms in 2020 due to pricing. Engineering Reports and Recommendation Responses are critical to the underwriting process. If a location inspects poorly, the renewal will likely still be a challenge. Recyclers remain a tough class, but if losses are favorable some carriers are now willing to discuss offering some capacity. Poor loss experience continues to present challenges for insureds in this space. Brokers need to submit all available information and find creative ways to place these accounts. Hard to place risks still require London market access with reinsurance capacity coming out of Asia and Bermuda, among others. The wood segment remains hard with losses still driving up rates for some insureds. Sawmills and Pellet Mills are taking rate increases, but some renewals are starting to see positive deductible and term changes, especially if a portion of the values can be carved off from the core insurance program.

SEVERE CONVECTIVE STORMS/HAIL Areas across the country are experiencing new severe weather patterns, which is creating exposure changes. Underwriters must quote with limited historical data that doesn’t always align with convective modeling. Carriers have tightened on wind/hail in Iowa after the derecho in 2020. In areas like Arkansas, Louisiana, and Alabama, carriers are pushing minimum 1% wind/hail deductibles for convective storm exposures when in years past they’ve utilized flat dollar deductibles, which generally doesn’t result in cost savings. This results in additional costs that need to be accounted for when purchasing wind deductible buybacks to satisfy lender and/or insured requirements. With insurance companies deploying less capacity per risk, multiple carriers may be required to achieve limits, which also increases placement costs. STOCK THROUGHPUT The Stock Throughput market is starting to stabilize after a few years of double-digit premium increases and changes in terms/ conditions. 2021 rates are predicted to be up overall by around 15%, with more significant pricing corrections balanced out by single-digit deals for clients with healthy loss records. On average, renewals are typically seeing between 5%-12.5% rate increases. Incumbent markets are pushing for rate and trying to hold deductibles. However, there is new capacity coming out of London with several new syndicates entering this space, creating competition. Both domestic and international carriers have strong new business goals, and that is fueling competition. Limited capacity is available for perishables, tobacco, wood, food, liquor (specifically bourbon and wine), and temperature sensitive risk classes, as well as commodities such as hay, corn, and rice with flammable dust exposure. Loss control inspections are still required for most risks involving significant warehouse values. WILDFIRES Capacity for high wildfire areas remains extremely limited and expensive relative to the balance of the property space after 4 consecutive years of large losses, impacting both standard lines and surplus markets. In 2020, California, Oregon, and Colorado saw significant wildfire losses, and we are now seeing wildfire guidelines in all Western states. Capacity remains very limited for high wildfire scores and line sizes have been further reduced in 2021. Markets that do provide coverage generally require higher fire deductibles. Even small accounts valued at less than $5M need to be layered with multiple carriers. Compressed primary layers are rated on a payback period similar to a deductible buyback. Inconsistent information from various sources including proprietary models and vendors can make placing a wildfire/brush account difficult. Site specific information can be helpful in terms of clear space, construction, and private protection. Because there is not a universal definition of wildfire, when a carrier uses a WF deductible with their own unique wildfire definition, it makes layering accounts concurrently difficult. LONDON MARKET The London market is becoming more aggressive, especially on large habitational business. They are also starting to take excess positions on large schedules where in years past they were traditionally only a primary market. They are starting to ramp up and trying to write business after several years of a “book correction.” London is still pushing rate on renewals, but being reasonably fair on long term business incumbent to the London market.

 

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