COMMERCIAL AUTO

Florida is especially challenging, along with Georgia as premiums are rising, and markets are exiting those areas. This is generating non-renewals in the standard market and pushing business to the E&S space. Insureds continue to have difficulty hiring qualified drivers and finding carriers willing to handle that exposure can be challenging. It remains difficult to locate carriers for hired and non-owned auto (HNOA) when the GL carrier is unwilling to offer coverage, but HNOA doesn’t always fit well under a primary auto policy. CRC’s HNOA division is available to help, but occasionally a solution can’t be found. Excess auto is seeing a substantial number of freight broker/freight forwarder accounts, but there is a lack of excess market availability for these accounts as many markets are wary of entering the space.

CONSTRUCTION

The construction market can vary significantly by region; however, it is expected that 2023 trends will continue into 2024. It’s anticipated that insureds will see small rate pushes on the GL from incumbents. Excess incumbents are following suit when possible. If a risk is up in exposure, pricing will likely increase, and vice versa. However, the GL is not generally going to be as responsive to exposure level and will likely push some rate regardless.

ENVIRONMENTAL

Market capacity increased again in 2023 and pricing remains stable for most products in 2024. 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 price and coverage shifts. Site Pollution coverage, while remaining stable for pricing and coverages for most exposures, is hardening for hospitality, healthcare facilities, educational facilities, residential (i.e. condo, single-family, townhome), and certain multi-family exposures in large part due to mold losses.

Retentions/deductibles are increasing for mold coverage, but coverage is still readily available. Contractor Pollution Liability (CPL) and combined-form CPL/Professional products continue to be fast-growing with competitive with pricing options available. Combined-form GL/Pollution remains competitive, but the market is seeing single-digit rate increases. The number of carriers offering companion Auto and Workers Compensation has increased and will continue to do so in 2024. PFAS has become a hot topic and most carriers are adding PFAS exclusions to new business and renewals. ISO also recently published a PFAS exclusion, and it is expected that PFAS underwriting concerns will be widespread.

HOSPITALITY – RESTAURANTS & BARS

Price, terms, and conditions can vary depending on the venue. It’s often the most important factor other than loss history. When it comes to the primary, 2024 will look much like 2023. There continues to be a lack of liquor liability markets in some states, including West Virginia, Iowa, South Carolina, and Alabama. 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. While there is no shortage of markets that can entertain the class, excess coverage capacity is thinning out and driving up rate and attachment points.

HOSPITALITY – HOTELS & MOTELS

Business continues to flow into the E&S marketplace due to A&B and human trafficking claims. 2024 will look much like 2023 for primary coverage. While RPGs were heavy in hotels and motels, many of them are no longer available. This reduction in available RPGs willing to quote the business is driving substantial increases in excess costs. In states with challenging liquor liability laws, such as South Carolina, it is difficult to find carriers willing to cover that liability.

PRODUCTS LIABILITY

Apart from a few historically tough products such as hoverboards and electric scoots, the products market has begun to soften. It’s a class of business that many carriers are targeting, so competition is increasing. The new carriers that entered the marketplace in 2023 are helping to provide capacity and stabilize pricing. The larger price increases seen in prior years are no longer the norm. Most accounts are seeing only small increases, and in some categories of business, growing accounts are seeing flat renewals. Terms and conditions are stabilizing, but obtaining coverage for specific terms can still be difficult and expensive.

PRODUCT RECALL & CONTAMINATION

The 2024 marketplace will look similar to that of 2023. Pricing and terms are competitive as the market remains soft. Capacity is still abundant. The market includes a good mix of larger experienced carriers and some newer MGA and carrier players. Lloyds remains a key factor as well. The need/desire for contamination/recall coverage has continued to rise. With respect to claim severity, the cost of a contamination or recall event is rising as well. inflation is still an issue as incidents will continue to be costlier than in years past due to the overall increase in cost of materials, services, and inflated end retail pricing. The regulatory landscape continues to evolve which adds to the risk of recall. More difficult classes include auto/ aviation products, CBD/THC products, and lithium-ion batteries as well as their related products.

PUBLIC ENTITY & HIGHER EDUCATION

The public entity and higher education market firming has slowed, with un-distressed business seeing rate increases of 0%-7%. Replacing capacity continues to be a driver of significantly higher prices and can often lead to larger retentions as well as the purchase of lower overall limits. Insureds with a worse-than-average loss experience will contend with higher attachment/deductible/SIR, more restrictive coverage, or less overall limit - even in cases where incumbents are willing to offer renewal terms.

Relativity in pricing layers has started to decrease. Line sizes have also stabilized with the vast majority of carriers limiting their per risk capacity to $5M or lower. Most carriers have adequately staffed to accommodate the rise in submission flow, which increases the likelihood of generating competition and is helping to slow pricing increases. The capacity that entered the market last year is growing as a percentage of the market, but it continues to be relatively expensive with a limited appetite and higher minimum premiums. There is still heightened scrutiny around sexual abuse/harassment, state-specific revival laws for victims of sexual abuse, law enforcement, correctional facilities, state-specific weakening of tort caps relative to law enforcement, social inflation, TBI/CTE/Concussions, crime scores, and cyber.

REAL ESTATE – HABITATIONAL

The majority of multifamily property owners will continue to face many of the same challenges they have since 2021 when attempting to secure reasonable rates and terms, which is driving more business to the E&S space. The primary GL and lead $5M marketplace is still tight with few new carrier entries. Unless it is a very large account, it can be difficult to find a clean GL form. Underwriting remains very disciplined. Rates remain high with the majority of E&S carriers looking for single to double-digit increases along with possible new coverage restrictions. Some admitted carriers have pulled out of FL, GA, and parts of TX, making it challenging to place real estate in those areas. The rise of violent crime in many major cities has many insurers sub-limiting A&B claims or excluding them altogether. Crime scores have become an increasingly important tool underwriters use to evaluate risks. Habitability claims are also still a problem in CA but are also becoming an issue in WA and parts of NY. CA, TX, FL, GA, PA, NY and NJ, as these are the most challenging states in which to secure terms. Pricing relativity between layers is hovering near 40% - 50%. The market may stabilize further in 2024.

TRUCKING – PRIMARY

While inflation increased in 2023, freight rates dropped as demand for freight decreased. Economic issues remain a major concern for the industry. Inflation has driven up operating costs from maintenance and fuel to vehicles and labor. Coupled with a lower demand for freight and freight rate decreases, this has put significant pressure on motor carriers’ operating margins. The economy will dictate freight demand, and many are predicting a soft landing rather than a recession. If this were to occur, there may be an uptick in demand in the second half of 2024.

However, the economic realities of 2023 are expected to spill into 2024. The industry continues to expand the adoption of fleet technology, specifically telematics. Motors carriers that embrace this are seeing more efficiencies within their operations and better insurance pricing. They are looking to save money wherever possible, and insurance costs are a substantial portion of their overhead expenses. Many insurance companies will offer discounts or subsidies via various telematics providers, which can help offset costs. There is plenty of capacity in the marketplace, which in turn is lowering rates - especially for the better than average motor carriers. Insurtechs and other new entrants in the transportation space will continue to expand their capabilities in 2024, putting more downward pressure on rates.

TRUCKING – EXCESS

The market began to stabilize in 2023 and that continues in 2024. There is more competition for small to medium size business (under 250 trucks), which is helping to keep rates steady. Trucking continues to see more thorough underwriting than in past years. CAB scores are key to obtaining quotes and have a substantial impact on pricing. Information around telematics is also often a key piece of information required for quoting. Losses remain the top issue due to both the frequency and severity of claims, as predictive modeling illustrates that an increase in frequency means an account is more likely to have an excess claim. Larger fleets (over 500 trucks) will find it is more difficult to obtain capacity at a reasonable price. Most carriers won’t provide more than $5M in capacity, so excess placements still require extensive layering. Coordinating with retail markets is critical to achieve a $50M tower. TX, LA, and GA continue to see a firming of the market as some carriers have exited completely or are pushing higher rates in those states.

EXCESS & UMBRELLA

Market rates are stabilizing after correction, but rate decreases are not common. Loss-free accounts are no longer seeing double digit increases. Accounts may come in flat or with single digit increases. Challenged accounts will see larger increases. Carriers are generally providing lead capacity of only $2M - $5M and it comes at a higher premium. If taking a lead position, many carriers also want excess. Some middle market regional carriers have dramatically reduced their lines on the excess to only $1M - $2M or exited exit entirely due to the fear of large verdicts. In excess of $10M, capacity becomes more readily available. Layer trapping remains a concern. Milder risks are seeing larger drop-offs in layer relativity. CRC’s e3 Excess Casualty facility has become key in providing capacity for many accounts requiring extensive layering.

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