2018 P & C Outlook

What 2017 Has Done to Rates in 2018 and What You Can Do About It

January 25, 2018

Six substantial hurricanes. 15 episodes of severe wind and hail damage in the Midwest, averaging $1 billion in losses each. Wildfires that ravaged land and homes, especially in California. Major earthquakes hitting Mexico and other areas. Devastating mudslides in early 2018, a direct result of the wildfire damage.

Combine that unusually high level of natural disasters with substantial change in auto/ truck risks and higher jury awards, along with an increase in General Liability litigation and awards, and 2018 is turning out to be a year of rising insurance rates.

Will premiums rise aggressively? Not yet.
The auto market is becoming tighter each month (but with very little interest in Trucking and Livery) producing a 7% – 12% increase over the next two years.

Property premium increases are also on the way, probably by late Q1 2018. Rates will very likely go up each quarter by 3% – 4%. (Ultimate funding appears to reach 6% – 12%, excluding habitational which will continue to rise.) And increased litigation is causing General Liability costs to increase 5% – 7% in each of the next two years.

These increases will be felt quarter by quarter, rather than all at once. And external conditions —particularly weather (good and bad)—could definitely affect rates.

Workers’ Compensation will continue to stay soft, with a possible small decrease of 5% – 8% on average. Medical cost inflation was overstated in prior years affecting current loss rates.

Umbrella/Excess pricing will follow the pattern of General Liability and auto, but with smaller increases. Management liability rates will also see small increases due to litigation and cyber losses. Economic and political change will also put pressure on corporate leadership and Boards.

The Reinsurance market, which was hit extremely hard in 2017, especially in coastal areas, will need to pass on substantial rate increases on the first of the year, July 1, and January 1, 2019.

Insurance carriers report they will aggressively pursue new business, but will be very selective. Here’s what we’re hearing about rates from our partner carriers: upwards of 15% increases on property along with market increases on auto from one carrier, while anotherpredicts an average auto book increase of 8% – 10% and still another believes we will see a potential 25% rate increase in certain property markets, such as costal, flood-prone and fire-prone areas.

What can MMA do to help you anticipate and plan for these changes?
Group Captives and Alternative Risk options should be discussed proactively. Planning for risk —preventing, reducing, and managing it— needs to be a priority: everything from hiring to facility safety to driver’s safety to cyber security. After all, insurance can only support 35% – 40% of your risk. Developing a plan and putting it in place, and making use of the benchmarking and analytics technology we can provide, is crucial.

Meet with your MMA representative sooner rather than later to make 2018 a solidly manageable year, despite what 2017 did to raise your rates.


This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Marsh & McLennan Agency LLC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affective if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or should change.