Post on 11-Apr-2017
ECONOMIC TRENDSCommercial Insurance Outlook
Trindl ReevesPrincipal, Chief Sales OfficerJanuary 7, 2016
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MARSH & McLENNAN INSURANCE AGENCY LLC • BARNEY & BARNEY
• Decreases average 4% across all lines• Incumbents don’t want to lose business• Carriers will fight to keep good clients• Excess capacity• Merger activity (Chubb/ACE, XL/Catlin,
Tokyo/HCC)• Social Engineering
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• Auto going up 5–10%– More expensive to repair cars
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EMPLOYMENT PRACTICES LIABILITY• California remains difficult• Significant claim activity• No coverage for Wage & Hour
DIRECTORS & OFFICERS LIABILITY• Improving market• Distinguishing risk profile is key• Coverage for investigations on rise
(public companies)• Cyber exclusions (?)
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STILL A HOT TOPIC• Interest by Boards of Directors• More companies buying coverage
– 5–10% of clients have coverage– Existing buyers increasing limits
BREACH FATIGUE!
• Who owns it
• Resource allocation issues
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• First created in 2002 and renewed 2015 as TRIPRA
• Provides re-insurance coverage to insurers in the event of a certified terrorist attack
• Automatically included in workers’ compensation
• Property take up rates are approximately 60% depending on the size of company
• Stand alone coverage – longer term contracts and avoid requirement that Congress must certify an act of terror
• Underwriting considerations:– Concentration (employees, property values)– Location of risk– Current capacity from the insurer
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CYBER TERRORISM• Now excluded from TRIPRA• Review your cyber policy for coverage
(expressly granted or silent)
POLITICAL VIOLENCE COVERAGE • Global corporations• Strikes, riots civil commotion, rebellion,
revolution, war and insurrection
ACTIVE SHOOTER COVERAGE• Covers an employer’s expenses related to the
attack (counseling services, public relations, etc.)
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Calendar Year Combined Loss and Expense Ratios
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140%
50%
100%
150%
103 10294 94
80
6254
4553
6473 74 74 76 72 68
20 1612 12
11
1011
1314
17
21 20 25 18 1918
2220
18 16
15
1414
1618
20
22 2323
20 1818
145138
124 122
106
8679
74
85
101
116 117122
114109
104
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Industry Average Charged Rate per $100 of Payroll
1996 1998 2000 2002 07/03-12/03
01/04-06/04
07/04-12/04
01/05-06/05
07/05-12/05
01/06-06/06
07/06-12/06
01/07-06/07
07/07-12/07
2008 2009 2010 2011 01/12-06-12
07/12-12/12
2013 2014 01/15-06/15
0.00
2.00
4.00
6.00
8.00
2.562.33
2.69
4.66
6.296.05
5.49
4.96
4.36
3.50
2.85 2.752.30 2.15 2.10 2.25 2.32 2.47 2.59
2.88 2.97 3.01
Dollars
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SB863 (passed 09/2012)
• $770M net savings to CA Workers Compensation system so far
– Reduced physician/surgery costs– Reduced number of liens– Increased IMRs, cumulative trauma, attorneys
EXPERIENCE MODIFICATION CALCULATION CHANGES
• 2016 – Using expected loss rates resulting in Experience Modifications being issued faster
• 2017 – Changes in “split point” to consider size of employer; more emphasis on frequency
RATES ARE GOING DOWN• 2% rate reduction approved for January 1, 2016• 10.2% rate reduction approved for July 7, 2016
This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Marsh & McLennan Insurance Agency LLC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affective if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or should change. CA Insurance Lic: 0H18131