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Insurance company market update

ICPL Insurance Market: Q1 2020 update

Insurance Consulting and Technology
COVID 19 Coronavirus|Insurer Solutions

By Kevin Kirby | May 21, 2020

ICPL insurance market highlights; including a focus on cost, markets, targeted segments, capacity, coverage, and COVID-19 impact.
Cost and retentions
  • Pricing: Premiums are rising, with even favorable accounts subject to rate increases of 5-15% as a starting point.
    • Those insureds with poor claims experience and/or more challenging risk profiles can expect increases of 15%+.
  • Retentions: Substantial pressure is being applied to increase retentions in line with growing legal fees and settlements.
    • Several industry Executives have cited ‘social inflation’ as a trend impacting settlement amounts which is not likely to subside.
  • Appetite for primary ICPL is segmented by size and type of insurer – there are sufficient candidates for middle market business, but only a select few carriers serve as viable leads for large risks.
  • London remains a primary market for Bermuda-domiciled insurance companies as well as potential excess capacity for the US.
  • The Bermuda market is largely limited to excess participation, though primary may be considered with a minimum retention of $5m.
Targeted segments
  • Favorable: subsets include mutual insurers, reinsurers and middle market insurers (less than $2bn in revenue).
  • Unfavorable: life insurers, auto, long term care and P&C insurers with outsized exposure to areas impacted by natural disasters.
  • Much of the underwriting process is focused upon geographic diversification of the insured, with an emphasis upon demonstrating an understanding of and process for navigating regulatory hurdles.
  • Increased scrutiny on insurers with substantial exposure to COVID-19 both in terms of contractual liability and on the investment side.
  • Carriers have looked to scale-back limits to no more than $10m for a single policy, though historical levels of $15m+ are less prevalent on the E&O than for D&O.
  • Primary ICPL remains a loss leader for carriers, relative to other financial institutions, so packaging opportunities on the ICPL in conjunction with more profitable lines of coverage may be necessary to drive meaningful competition.
  • Excess layers remain more competitive as a number of markets are willing to attach higher up on programs.
  • Broad regulatory coverage is of paramount importance, with an increasingly complex supervisory framework among State, Federal and International regimes.
  • Sales and marketing coverage for life insurers is difficult to obtain, with many markets solely affording sub-limits, higher split retentions or excluding altogether.
  • Starting in the UK and Europe, carriers in the US have begun to address ‘silent’ cyber through the addition of clarifying language which either affirmatively grants or excludes coverage for claims related to a cyber event. No uniform approach has been adopted to date.
  • Mitigation coverage for costs incurred in remediating or mitigating a potential loss is available in the UK marketplace.

Impact of COVID-19

  • The impact of the pandemic on Insurance Company D&O and ICPL renewals is yet to be fully determined and is evolving daily.
  • Carriers are generally behaving very cautiously, with competition significantly reduced as the appetite to compete for new business has largely dissipated.
  • Allow for more time in the renewal process and expect several questions relating to both the impact of, and response to, the pandemic.


Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include COVID-19 coverage. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. Some of the information in this publication may be compiled by third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort, or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates. COVID-19 is a rapidly evolving situation and changes are occurring frequently. Willis Towers Watson does not undertake to update the information included herein after the date of publication. Accordingly, readers should be aware that certain content may have changed since the date of this publication. Please reach out to the author or your Willis Towers Watson contact for more information.

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Insurance Company Market Update – Q1 2020 PDF 2.8 MB

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