Insurance Marketplace Realities 2022 – Middle market

Rate predictions

Rate predictions: Middle Market

	Trend	Range
Favorable risks
Property		+5% to +10%
General liability		+2% to +7%
Automobile		+10% to +15%
Workers compensation		Flat to +5%
Umbrella		+15% to +25%
Excess		+15% to +25%
Challenging risks
Property		+15% to +25%
General liability		+15% to +25%
Automobile		15% to +25%
Workers compensation		+5% to +10%
Umbrella		+25% to +50%
Excess		+25% to +50%

Key takeaway

The middle market sector continues to see a two-tiered marketplace, though the number of insurance buyers facing challenging conditions has shrunk, as marketplace corrections on rates, structure and/or capacity have already been implemented.

Favorable accounts have begun to see single-digit increases or even flat rates on renewals as well as competitive alternatives in the marketplace — though many buyers will still face double-digit increases.

• Favorable accounts are softer in occupancies, with low cat exposures, favorable loss experience, strong risk control procedures in place and lower risk of liability claims. These risks tend to have holistic, one-carrier solutions (e.g., package policies).
• Favorable classes of business include financial institutions, professional service firms, wholesale/distribution and some manufacturing.

Challenging risks include those with lax risk management, heavy cat exposure, adverse loss experience and/or are in a class that is considered challenged, including habitational, transportation, healthcare, social services, hospitality, food and foundries.

• These risks are usually mono-line placements with multiple carriers on various lines of the program.
• Challenging risks are continuing to see significant rate increases, structure changes and reductions in capacity and coverage as carriers continue to reevaluate their books of business.

Property

• Property limits, including business interruption, are being closely evaluated by underwriters to ensure proper valuation.
• Contingent business income continues to see tighter underwriting guidelines and reduced limits.
• Cat exposures are harder to place (coastal, earthquake, flood, wildfires, wind). Capacity is being reduced and deductibles increased.
• Additional exclusions for civil commotion and riots are being seen on some hospitality, public entity, retail and real estate accounts.
• Water damage coverage is experiencing higher deductibles and lowered sub-limits, particularly in the real estate industry.
• Convective storm deductibles are being added in states that previously did not have them, and elsewhere these deductibles are being increased.
• Loss control visits are more frequently required prior to quoting.
• Affirmative cyber peril exclusions and communicable disease exclusions are being applied on property policies.

General liability

• Underwriters are showing heightened concern surrounding human trafficking exposures for hospitality and real estate accounts.
• Sexual abuse and molestation coverage continues to see reduced capacity and increased underwriting scrutiny.
• Carriers are reevaluating current crisis management limits.
• Most markets are no longer considering uncapped per-location aggregates.

Automobile

• Mono-line auto risks are extremely challenging to place and should always be leveraged with other lines of business.
• Livery and ride-share exposures have become mandatory exclusions.
• Hired and non-owned auto coverage continues to be heavily underwritten, and insureds with higher exposures are not seeing market interest.

Workers compensation

• Infectious disease-related exposures are closely underwritten.
• Remote working has created questions surrounding accurate payroll reporting, especially in monopolistic states where coverage needs to be purchased through the state pools.

Umbrella and excess liability

• Higher attachment points are being required by lead markets on both general liability and auto policies. These are most often seen on real estate, healthcare, manufacturing, distributors and hospitality accounts.
• Umbrella capacity is being reduced across the board, especially unsupported leads.
• Capacity for lead umbrellas has been reduced significantly. Typical limits being deployed are $5 million to $10 million.
• Carriers who write both primary and umbrella are leveraging those capabilities. The resulting packages are often attractive and in some cases are required.
• Risk purchasing groups are still viable, but underwriting guidelines are being tightened and additional time is required for underwriting. Capacity is being reduced and insurers/reinsurers are changing frequently.
• Buyers are deciding to purchase lower limits due to pricing hikes and may buy only what is necessary to meet contractual requirements.
• Carriers are less willing to provide certain coverages, such as professional and sexual abuse and molestation.
• Minimum premiums have increased significantly, driving pricing higher for excess layers.

COVID-19

• Removal of communicable disease exclusions can be negotiated on certain classes of business if proper COVID protocols are in place.
• Carriers have begun to offer carve backs to the communicable disease exclusion, providing coverage for non-pandemic-related communicable diseases.
• An increase in companies repurposing their locations or operations to accommodate COVID risks continues.
• Buyers continue to seek premium relief if they face decreases in operations/revenues due to government directives.
• Carriers remain concerned with workers compensation exposures in states with presumptive rules.
• As organizations return to in-person business, scrutiny is on increased exposures and the potential for increased loss activity.

Disclaimer

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed subsidiaries of Willis North America Inc., including Willis Towers Watson Northeast Inc. (in the United States) and Willis Canada, Inc.