Liability risks in the United States
According to Barclays Research analysis, during late 2018 to 2019, the rates for 2019 on general liability increased 2% in Q1 to 5% in Q3 in average. On individual basis rate increases were up to 25%. Further increases are expected for 2020, driven by “industry-wide unsustainable loss ratios”. All major broker houses as well as reinsurers are predicting higher rates on US Liability. So, what is behind these developments? And what are the consequences of this?
In the United States, the insurance market is reacting to changes in the casualty market by increasing rates as, in particular, complex risks with exposure to social inflation, health and personal injuries are facing large rate increases.
Reinsurers are exerting pressure following clear changes in the marketplace observed in 2020, effectively this is no longer a buyer’s market. Reinsurers focus on US exposures due to underlying challenges in the US.
For first time in ten years we have seen reinsurers actively demanding new exclusions during 2020 renewals. Today, large reinsurers are prepared to walk away from business unless exclusions are introduced. Some of these include, particularly pandemics or communicable diseases, as well as opioids and e-cigarettes.
A difficult year
Around the world, 2020 has been a disorienting year. The United States has experienced an unusual year as the COVID-19 pandemic continues to spread across the country. The nation has also faced racial tensions on an unprecedented level, including protests, riots and a rise in civil unrest.
From a business perspective, companies are still trying to maintain their operations and survive the pandemic. While sales are declining and some businesses are facing bankruptcy, others are fighting to adapt to the new circumstances.
For large international corporations, the aftermath of the COVID-19 pandemic is yet to be seen. However, the risks remain high for many companies. Risk factors include, but are not limited to, medical and social inflation, litigation funding and auto claims.