The Bermuda insurance market continues to navigate a challenging but competitive environment across all lines of business.
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Rate predictions: Bermuda
Trend
Range
Casualty
Low hazard
+1% to +3%
High hazard
+20%
Property
Non-CAT
-10% to flat
Distressed or CAT-exposed
-5% to +5%
Financial lines
EPL
Flat to +5%
Wage & hour
Flat to +20%
D&O/management liability
-15% to flat
Cyber
-15% to flat
Casualty
Rate trends: Casualty rates are rising by 5% to 10% across the board, mirroring trends in London and the U.S. Lower-risk accounts are seeing minimal increases (1% to 3%), while higher-risk or loss-affected accounts are experiencing rate increases of up to 20% to 30%, driven by capacity constraints.
Nuclear settlements: Large nuclear settlements are driving additional rate pressure. These settlements tend to happen quickly, often spurred by concerns over reputational harm and social inflation, resulting in faster and larger-than-normal outcomes.
Capacity shifts: Despite new entrants to the Bermuda excess casualty market, overall capacity is flat or slightly shrinking. Existing markets are pulling back, with the average deployed limit now between $10 million and $15 million, down from the previous $25 million minimum. New entrants are offering even smaller capacities, typically between $5 million and $10 million.
Client risk participation: As capacity continues to decline, sophisticated clients are taking on more risk through captives or self-insuring. This is particularly common in high-hazard sectors, where clients are assuming entire layers or portions of layers within their programs.
Terms and conditions: Terms and conditions remain stable, though PFAS continues to present a challenge. Underwriters are responding with increased inquiries, questionnaires and exclusionary language.
Property
Increased competition: The North American property market has become more competitive, with renewal rates varying significantly based on program structures, occupancy, CAT footprint and loss experience. For preferred occupancies, abundant capacity is exerting downward pressure on rates, leading to flat to double digit decreases. Modest reductions are achievable for loss-free accounts with a light CAT footprint.
Challenging risks: Rates for more challenging occupancies (e.g., food, waste, primary habitational, semiconductors, auto) and loss-impacted accounts continue to face upward pressure. However, the introduction of new capacity, increased retentions, captive usage and alternative risk transfer (ART) products can yield more favorable outcomes for insureds.
Non-traditional CAT exposures: Markets remain focused on non-traditional CAT exposures, such as wildfire, severe convective storms (SCS)/hail and atmospheric rivers. These risks are closely monitored due to their rising impact on profitability.
Carrier growth strategies: Carriers increasingly view property insurance as a key growth area. Underwriters are balancing rate adequacy with market share and diversification strategies, including expanding lines, new layers and careful capacity deployment. This trend is adding to the competitive environment and challenging underwriting discipline.
Hurricane season impact: The outcome of the 2024 North Atlantic hurricane season will play a critical role in shaping the market’s direction in H2 2024 and into 2025.
Distressed renewals: For distressed renewals and occupancies with heavy CAT exposure and/or negative loss experience, underwriters will continue to push for rate increases, though these are likely to be more restrained than in prior years.
Capacity
Competitive landscape: By the close of Q2, competition became more pronounced across the market, especially for preferred risks. This competition is expected to intensify as carriers seek to protect and grow their premium base. Factors influencing capacity deployment include risk quality, CAT footprint, rate adequacy, profitability and relationship length.
New business: Capacity restrictions for new business have eased as carriers actively look for growth areas. The pursuit of premium growth is driving more flexibility in capacity deployment.
General comments
Submission quality: A quality submission and clear placement strategy are essential to securing favorable outcomes. Early engagement with incumbents and a clear demonstration of progress on risk recommendations can be key differentiators in negotiations.
ESG factors: Environmental, social and governance (ESG) considerations are becoming an integral part of the underwriting review process, with a wide range of areas under scrutiny.
Accurate valuations: Ensuring accurate declared values and employing robust valuation methodologies remain critical to avoiding restrictive policy language and coverage limitations.
Financial lines
Competition among financial line placements remains strong, keeping the Bermuda financial lines market stable. Most of the established financial lines products, with the exception of wage & hour and lawyers E&O, are in softer market conditions. The extent of rate increases or decreases will still be determined by many factors, including industry and loss history.
Employment practice liability
Rate environment: Assuming no change in risk profile and no losses, rate increases are more likely to be close to or at flat. California continues to be the most problematic jurisdiction for insurers.
Capacity: Overall capacity in the EPL market is stable. We are aware a new entrant is coming to the market in Q4 with $5 million to $10 million in capacity for middle market opportunities (lower headcount).
Limits/retentions: Carriers continue to manage capacity on any given risk with maximum limits of between $10 million to $15 million. Separate retentions for class actions, especially in California, are still being enforced.
Wage & hour insurance
Rate environment: Given significant losses and the current legal environment, the rate environment is such that many markets are imposing increases, particularly if in a difficult industry and/or in California.
Capacity: Overall capacity is stable, with some changes in how the capacity is deployed — one of the leading carriers is currently only offering coverage on a standalone basis with no blended EPL option.
Limits/retentions: Many markets have increased retentions and implemented separate, higher retentions for California risks. While many of the primary markets have capacity to offer up to $25 million in limits, the average limits are between $10 million and $15 million.
D&O/management liability
Rate environment: We continue to see rate decreases in H2 of 2024; however, we foresee challenges obtaining material decreases particularly on high excess, whereas we are nearing minimum rate adequacy requirements for capital deployment.
Capacity: 20 carriers and over $400 million in capacity.
Focus on coverage: Insurers have been more willing to expand coverage. Carriers have also been busy amending their base forms to bring in line with market leading coverages. In line with our retail teams, we continue to explore expansion of coverage during the 2024 renewal cycles.
Executive compensation clawback: One Bermuda carrier has released its policy form in Q3, and we are waiting on two others to release theirs imminently. With new regulations by the SEC these products look to fill the gap in coverage for non-fraudulent receipt of performance bonuses for officers based on misstated financials
Cyber
Overview: Market stabilization continues into H2 2024 largely due to intense competition between cyber markets looking to retain their renewals and meet growth goals. There are no signs of this dynamic shifting as previously alluded to in prior update.
Rate environment: We are continuing to see material rate reductions in the excess capacity for the second year in a row. primaries may be holding flat or even going at a slight increase, the excess is still being targeted for reductions, and we are seeing those range from -5% to -20%.
Capacity: Bermuda markets are stable with 12 carriers and $130 million in capacity. Carriers are continuing to offer between $5 million to $15 million on any one risk. Incumbents remain eager to retain business and excess carriers are looking to maintain renewals and/or undercut each other if given the chance.
CyProtect Bermuda: This new proprietary excess follow-form product released in Q1 2024 was developed for large and complex risks. All 11 traditional cyber markets supported this WTW Bermuda initiative, and we have bound a few opportunities already year to date.
Summation
For core renewal business we expect high levels of competition to continue to drive the market as carriers will remain flexible to maintain the renewal including offering coverage grants/expansions. Terms and conditions will also be driven by the length and quality of the relationship and/or multi-line touch points. Capacity for new business is generally widely available globally except wage & hour capacity which remains finite to Bermuda as a Bermuda-only offering.
Disclaimer
WTW offers insurance-related services through its appropriately licensed and authorised companies in each country in which WTW operates. For further authorisation and regulatory details about our WTW legal entities, operating in your country, please refer to our WTW website. It is a regulatory requirement for us to consider our local licensing requirements. Global Regulatory Disclosures
The information given in this publication is believed to be accurate at the date of publication shown at the top of this document. This information may have subsequently changed or have been superseded and should not be relied upon to be accurate or suitable after this date. This publication offers a general overview of its subject matter. It does not necessarily address every aspect of its subject or every product available in the market and we disclaimer all liability to the fullest extent permitted by law. It is not intended to be, and should not be, used to replace specific advice relating to individual situations and we do not offer, and this should not be seen as, legal, accounting or tax advice. If you intend to take any action or make any decision on the basis of the content of this publication you should first seek specific advice from an appropriate professional. Some of the information in this publication may be compiled from third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such. The views expressed are not necessarily those of WTW. Copyright WTW 2024. All rights reserved.
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