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Survey Report

Insurance Marketplace Realities 2020 Spring update – Personal lines

Personal Lines
COVID 19 Coronavirus

May 7, 2020

Homeowners should be vigilant about paying their premiums as well as strictly adhering to all underwriting requirements to prevent non-renewals.
Rate predictions
  Trend Range
Most risks
Homes under $1,000,000
Increase (pink triangle pointing upward) +3% to +5%
Homes over $1,000,000
Increase (pink triangle pointing upward) +5% to +7%
CAT exposed Increase (pink triangle pointing upward) +20% to +50% or non-renewed
CAT exposed with losses Increase (pink triangle pointing upward) +50% to +100% or non-renewed

Key takeaway

Carriers are actively looking to shed unwanted risks. Homeowners should be vigilant about paying their premiums as well as strictly adhering to all underwriting requirements to prevent non-renewals.

Homeowners rates continue to rise due to increasing risk.

  • While plumbing failures remain the number one source of residential water-related loss, 2019 was the one of the wettest years on record, another significant contributing factor.
  • Wildfires have burned nearly 70 million acres in the past decade in the U.S.
  • Climate change will remain a focus, as cat losses continue to increase in frequency and severity.

Replacement costs for home and auto losses are higher.

  • The cost of building materials has ballooned, due to increased demand by the housing industry as well as new tariffs.
  • Skilled labor shortages will likely continue to be a problem when the housing boom resumes.
  • Advanced technologies in new vehicles are driving up repair costs.

Dependence on excess and surplus (E&S) lines has increased.

  • Admitted markets have constricted appetite, most prevalent in cat-prone areas.
  • E&S carriers have more flexibility in pricing and coverage.
  • E&S wholesalers are struggling to keep up with demand for alternative solutions.
  • Price appropriate options are very limited for hard-to-place risks, leaving clients at the mercy of the temperamental E&S market.

Disclaimer

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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