Brace yourself for more rising prices and falling availability of coverage, warns Willis
Insureds should brace themselves for a double whammy of rising prices and declining availability of coverage in the traditional insurance markets, according to Vittorio Pozzo, captive advisor for Western Europe and Great Britain at Willis Towers Watson.
Structural challenges, stalling growth in alternative risk capital and higher losses among insureds are driving price increases across the insurance industry, he said, creating an increasingly difficult environment in which to secure insurance coverage.
In the first quarter of 2019 rates rose 2 percent on average, according to the latest Insurance Marketplace Realities report by Willis Towers Watson. Prices rose in nearly all commercial lines, with the notable exception of workers’ compensation, according to the report. Energy and marine saw particularly high increases of around 20 percent.
Carriers are struggling to meet their cost of capital, while carriers in mature markets have been particularly hard hit by the low-interest-rate environment, said Pozzo. “ILS products, especially those providing aggregate catastrophe and retrocession cover, have performed poorly for investors, thereby resulting in less available capital,” he said.
According to one Willis Re report, the variation in ILS funds' exposures to different product types "is starting to impact the ability of many funds to attract new investors."