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Talk about stability: the property and casualty market has been so steady lately that not even November’s earth-shaking presidential election is likely to have much effect on it.
Property and casualty insurance experts say that insurance rates are likely to remain about the same, and perhaps even go down a little in some areas. Depending on how aggressive insurance carriers are going after new business, 2017 rates will probably be comparable to 2016.
Capacity for new business remains high. The carriers’ investment portfolios are healthy, and other than a few large events, natural disasters were manageable in 2016. All of this is good news for buyers—there is simply little reason to suspect premiums rates for P&C policies will rise any time soon. But a time when the market is stable is also an opportunity to look again at your company’s overall P & C strategy: are you well positioned for future challenges? Has your company’s growth or changes in the industry opened up possible new areas of risk? 2017 will be a good year to examine these questions.
Broker Consolidation Means New Opportunities for Employers
One area of concern going into 2016 was the possibility that insurance carriers would see a wave of mergers and consolidation, causing upheaval for businesses and possibly cutting back on choices. The $28 billion acquisition of Chubb by ACE Limited (the merged company uses the Chubb name) in 2015 had some predicting a wave of mergers among carriers.
Although some consolidation has been seen, the Chubb development was not the start of a major trend in 2016. Again, carriers have had a pretty good run the last few years, and consolidation hasn’t been seen as a way to grow business—when other options continue to be available.
For insurance brokers and agents, it’s a different story. An aging workforce; pressure from rapidly changing technology and business models; and market saturation has caused some brokers to close shop. At the same time, larger firms have gone on an acquisition spree, bringing smaller brokerages into the fold. Larger brokers have branched out in many cases to bring in new types of insurance and consulting options.
The upshot is that this is a good time to look again at your broker’s offerings and activity. If your broker does not offer the range of services that fits you and your employees, there are other options readily available. Talk to your broker about new developments in areas such as environmental risk; safety and loss prevention; ergonomics; and wellness/health management.
Smart shopping will be good for your company when it comes to insurance and benefit products. Finding the best fit with a brokerage partner is more than just seeking the lowest-priced insurance policy, however. It’s important to consider your entire cost of risk and a broker or agent’s ability to help you lower that larger cost by reducing your claims, minimizing their impact on your future premiums and even developing risk control strategies related to hiring and training employees.
New Products Continue to Evolve
Cyber liability—and a related risk, impersonation fraud (also called social engineering)—have drawn more attention in the last few years. As noted above, these areas are among the relatively few seeing premium increases, but even here, the market is not as much in flux as in the past. Although 2017 may see some increases in premiums in these areas, competition among carriers in this growing segment may keep premiums steady in the coming year.
Many companies have become more sophisticated about these technology-related risks and understand better that they need to protect themselves. With their increased experience with cyber liability, carriers are finding the right price points for their products, and as the risk becomes better understood, coverage is getting broader and more affordable. More insurance companies are offering products in this area, and that competition is also helping to hold down costs. At a time when premium costs may hold steady or decline for some products, 2017 may be a good time to invest in cyber liability, where future risk is likely to increase.
Auto Insurance, Workers' Comp May be Problem Areas
One area where premiums may go up in 2017 is auto insurance coverage—which has seen premiums on the upswing in recent years. Traffic accidents often lead to litigation, experts note, so that may be affecting premiums. In addition, vehicle repair costs continue to climb as well. Some see the rising auto insurance costs as a correction from a period of too-low premiums in the past.
There are still mixed signals on the workers’ compensation insurance front, as some predict a growing rate of claims from employees who use the workers’ comp system for addressing non-work-related injuries.
In this area, the outlook for 2017 is unclear. There certainly will be changes in the medical insurance markets, as the new administration and Congress plan to reform the Affordable Care Act. Workers’ comp, however, is somewhat isolated from the ACA controversies, and less likely to be affected by the political upheaval, though its connection to health insurance claims remains an ongoing consideration. Changes to the ACA may affect this relationship going forward. On a smaller scale, with workers’ comp there is always a risk—albeit small—of fraudulent claims and the higher rates that might come with it.
Many carriers and businesses have become sophisticated in dealing with and managing workers’ compensation risk and can put in place predictive modeling and fraud management tools to help keep claims in check. In addition, the country’s aging workforce has required employers to put a new emphasis on wellness and preventive efforts—which have helped to moderate claims overall for companies with enough foresight to follow that path.
2017-A Good Year to Take Stock?
With the P&C insurance field relatively stable and quiet, 2017 will be a good year to re-examine your company’s strategies and policies, to make sure your company is prepared for more difficult times. A fresh look at the products available and possible areas of risk in coming years will help ensure that your insurance policies fully meet the needs of your company and employees—now and into the future.