Gallagher’s Proprietary Data Analysis Indicates Compounding Factors Are Driving a Hard Market, Accelerated by COVID-19
ROLLING MEADOWS, IL (STL.News) Gallagher, a global insurance and risk management brokerage firm, today released its Fall 2020 U.S. Market Conditions Report. The report provides rate guidance for specific lines of Property/Casualty commercial coverage, industry and geography utilizing Gallagher Drive™, the Company’s proprietary data and analytics platform.
The Gallagher Drive platform combines decades of historical records and credible third party data. When analyzed by Gallagher’s Market Relations team, who are experts with deep industry and business experience, Gallagher can give its clients the detailed information they need to take immediate and long-term actions, which is especially important in a hard market.
Key Drivers of the 2020 Hard Market:
According to the report, in a traditional hard market, capital and consequently capacity are reduced, limiting the availability of insurance. But this marketplace is driven by the need for underwriters to make a profit underwriting versus relying on investment income. Carriers remain intensely focused on underwriting discipline, ensuring they secure the right terms and pricing on certain lines of coverage that have historically not performed from an underwriting standpoint.
Compounding factors that are driving this hard market include:
- A spike in large weather-related loss events/catastrophes.
- Historically low interest rates.
- Industry-wide rapid increases in Liability losses.
- Increases in the frequency and severity of ransomware claims.
- The global pandemic and resulting economic uncertainty.
Market Report Highlights:
According to Gallagher’s Fall 2020 U.S. Market Conditions Report on client rate changes in the second quarter of 2020:
- 89% had a property rate increase, the highest number recorded since the early 2000s.
- 56% had a decrease in Workers’ Compensation rates.
- 65% experienced an increase in General Liability.
- 78% had an Auto Liability increase.
- 76% saw an increase in Umbrella/Excess Liability rates.
- 100% had an increase to their Directors & Officers rate.
- Cyber policy rates increased by 5 to 20%.
To download the full report, visit https://www.ajg.com/us/news-and-insights/2020/oct/gallagher-2020-fall-insurance-market-update/
Please note, data provided in this report includes averages and the variances we are seeing from the mean remain extreme. As we have outlined in previous market updates, a client’s risk profile is the primary variable dictating renewal outcomes. Loss experience, industry, location and individual account nuances will also have a significant impact on these renewals.