US pricing: Increases continue at slower pace

Insurance pricing in the second quarter of 2021 in the US increased 12%, year-over-year. Although pricing continued to increase, the rate of increase slowed for the third consecutive quarter.

Property insurance pricing increased by 9%, the fifteenth consecutive quarter of increase.

Property insurance pricing generally decelerated each month this year; falling from an 18% increase in January to 7% in June.
Clients with significant losses, poor risk quality, or significant exposure to secondary catastrophe (CAT) perils generally experienced above average increases.
The market deteriorated for clients heavily exposed to wildfire.
Insurers continued to scrutinize terms and conditions including deductibles, cyber and communicable disease exclusions, and time element extensions.

04 | US composite insurance pricing change

Casualty insurance pricing in the US increased 6%; excluding workers’ compensation, the increase was 10%.

Competition among insurers intensified for workers’ compensation.
Excess liability is expected to experience continued rate pressure throughout 2021, although more moderate than in 2020.

Financial and professional lines pricing increased 25%, driven by cyber and directors and officers (D&O) liability pricing.

D&O insurance for publicly traded companies increased 15%, which was lower than the 27% increase in the first quarter.
- Competition in both primary and excess D&O, with new capacity entering the market, contributed to a downward pricing trend.
- In both April and May 2021, excess rate increases were less than primary rate increases; a situation last experienced in January 2019.
- Challenging industry segments include pockets of life science, technology, and specialty retail.

The size and frequency of excessive fee litigation on defined contribution plans continues to significantly impact the fiduciary market.
Cyber pricing increased 56% in the quarter — including a 68% increase in June — driven by the frequency and severity of ransomware claims.
- Ransom payments frequently exceeded $US1 million and the resulting costs for business interruption or data exfiltration increased claim payouts.
- Many insurers narrowed coverage for ransomware losses, and tightly managed limit deployment on any one risk, oftentimes capping at $US5 million.
- Some insurers significantly changed underwriting strategy while others stopped offering cyber coverage.

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US pricing: Increases continue at slower pace