Alera Group’s 2023 Property and Casualty Market Outlook is drawing enthusiastic reviews from our clients — and with good reason. The report, our third annual outlook on the market for Property and Casualty (P&C) Insurance, is expertly informed, comprehensive, analytical, easy to read and helpfully augmented by informative charts and graphs. It’s a valuable resource to guide you in your planning and decision-making processes as you work with your broker to navigate the challenges ahead in 2023.
What the Market Outlook is not is a crystal ball.
After a tumultuous few years that have produced a global pandemic, an unprecedented series of catastrophic weather/climate (CAT) events and a war in Ukraine that has exacerbated supply-chain, energy and economic disruptions, no one can say exactly what unforeseen crises will impact the P&C market in 2023.
That’s why we’ll be following up the release of the Market Outlook with a series of updates in the Alera Group Insights blog on the industries and lines of coverage examined in the whitepaper — including a supplement addressing the impact on the Property Insurance market caused by Hurricane Ian, which struck Florida last fall shortly after Alera Group completed the survey of insurance company partners and wholesale intermediaries that informed the Outlook.
The impact of the storm – including a possible $75 billion in insured losses — is certain to be profound, and the hits just keep coming. Winter Storm Elliott, which rolled across 42 states late last month and hit the Buffalo, N.Y. area especially hard, is estimated to created another $5.4 billion in insured losses.
Market Bellwether: Property Reinsurance
Here’s what we know right now: January 1 reinsurance renewals are, by and large, completed, with many finalized at the last minute. Early indications from the reinsurance brokerage community are that placements for property in CAT-prone areas, specifically on U.S. deals, have been by far the most challenging segment of the market.
For reinsurance coverage of property in such areas, there are reported rate increases in the 45% to 200% range for U.S. excess-of-loss (XoL) placements. Even loss-free U.S. placements reportedly are up 25% to 50%.
Some reinsurers have pushed for a move to named-peril deals for CAT-prone areas, but it seems they were largely unsuccessful. Retentions on many programs — i.e., deductibles — saw significant increases.
We’re still assessing how this will play out in the primary market. But for any policyholder with significant property renewals, it is imperative to start the renewal process early, especially for property in a CAT-prone area.
Foreseeable Challenges, Recommended Strategies
Among the key findings detailed in the P&C Market Outlook:
- Generally speaking, pricing continues to rise for most coverages, but at more modest rates for most coverages other than Property.
- For most coverages — again, with Property Insurance a notable exception, especially in CAT-prone areas — there will be little change in availability.
- Capacity appears to be specific to the line of coverage, with General, Professional Environmental and Employment Practices Liability all appearing especially stable but Umbrella/Excess Liability continuing to present formidable challenges.
- Rigorous underwriting continues, with even tighter guidelines anticipated for Cyber Liability and Umbrella/Excess Liability, as well as Property.
Our recommended strategies for navigating the market:
- Being proactive in managing risk;
- Starting the application/renewal process early;
- Determining which coverages to prioritize;
- Knowing your building replacement values;
- Composing a presentation that will make you stand out as a good risk to insurers;
- Anticipating questions and information requests from underwriters;
- Understanding the details in each policy;
- Working with a broker who has the capabilities and objectivity to help you evaluate all options.
Naturally, the report goes into greater detail, providing you with analysis and insights that will have you prepared for the foreseeable challenges and agile enough to adapt to unanticipated events.
About the Author
Executive Vice President/National Property & Casualty Practice Leader
Mark Englert has more than 30 years of insurance industry and related experience. As an Executive Vice President and the Property and Casualty Practice Leader for Alera Group, he works closely with member firms across the nation to enhance client experiences, build out new capabilities, and coordinate services and resources.