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Pricing declines in P&C insurance slowing, says Willis Towers Watson

Pricing declines in the property and casualty space areslowing due to a complex commercial market, with insurers more likely to seeprice increases across various commercial lines, said in areport published April 7.

The company said that ample capacity in the global insurancemarketplace continues to buoy market conditions. Increased underwritingscrutiny, combined with potential challenges stemming from the changing carrierlandscape, is driving movement in some lines of business.

Willis Towers Watson also updated its 2016 marketplaceforecast for North American insurance buyers.

In the property market, rates are expected to fall for mostbuyers. Property rates are expected to decline 7.5% to 10.0% for companieswithout great exposure to natural disasters and 10.0% to 12.5% for those moreexposed.

For general liability, rates for the remainder of 2016 areexpected to be down 5% to flat. For buyers with recent claims, increases of 5%to 10% are anticipated. Workers compensation costs are forecast to remainsteady, from a decrease of 2.5% to an increase of 2.5%. In the auto liabilityline, an increase in the frequency and severity of losses is driving rates fromflat up to as much as 10%.

Rates for umbrella and excess lines are expected to remainflat or decrease up to 10%, but increase up to 10% for truckers and New YorkCity construction.

In executive risk lines, buyers will continue to find a mixof modest increases and decreases, according to Willis Towers Watson. Directorsand officers rates and fiduciary rates are predicted to decrease up to 5% orincrease up to 5%. Errors and omissions rates are expected to remain flat orincrease up to 10%, but increase 20% to 25% for poor loss experience orloss-prone industries. Rates for employment practice liability are predicted toremain flat or increase up to 3%, but increase 5% to 15% in California.

The cyber insurance marketplace is increasingly fragmented,Willis Towers Watson said. Cyber renewals are seeing primary premium increasesof 5% to 15% for most buyers, and 15% to 30% for point-of-sale retailers andlarge health care companies with no losses.

Market consolidation in the health care and employee benefitspace is poised to alter the landscape further. Benefit plan costs are forecastto increase 4% to 5% for self-insured plans and 7% to 8% for insured plans.

In the aviation space, rates are expected to be anywherefrom down 10% to flat for airlines and down 20% to flat for general aviation.Rates for most trade credit buyers are expected to remain flat or increase 5%,while those with South American or East European risks are predicted to seeincreases of 5% to 10%.