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Survey Report

Insurance Marketplace Realities 2020 Spring update – Property

COVID 19 Coronavirus

May 7, 2020

In the social and economic upheaval of the COVID-19 pandemic, steep rate increases are continuing and may begin accelerating.
Rate predictions
  Trend Range
Non-cat +10% to +20%
Cat exposed +15% to +25%
Cat exposed with losses +30% or more

Key takeaway

In the social and economic upheaval of the COVID-19 pandemic, steep rate increases are continuing and may begin accelerating; what is already accelerating is carrier scrutiny of policy forms in order to limit or reduce coverage.

The pandemic is materially changing the risk profile of most buyers of insurance.

  • The economic status of many organizations is now in a state of flux.
  • An emerging issue is protection for vacant and/or unoccupied locations. With that comes the potential for an increase in moral hazard. Insureds should review the vacancy clauses in their property policies for potential restrictions or warranties.
  • Many businesses are now projecting reductions in business interruption values, which will change the limits they may want to purchase. Attaining agreement upfront with insurers on how to address value fluctuations is critical as the overall impact to the buyer is unpredictable.

The pandemic is changing, for now, the conduct of insurance placement.

  • Underwriters are overwhelmed with submission activity; this increased volume allows underwriters to be more selective.
  • Most insurers are now working remotely, and underwriting meetings are taking place through video conferencing or conference calls. This doesn’t make the underwriting faster or more efficient and, in the current environment, underwriting is under considerable time pressure. Even initial quotes are coming down to the wire.
  • Buyers may struggle to obtain multiple options as underwriter bandwidth is low.
  • Loss control inspections may be difficult or impossible for the time being.
  • We are seeing reduced appetite for new opportunities where plant inspections are required.
  • Insurers and insureds are working together to sort out the new, if temporary, world of work from home.
  • Carriers appear to understand the challenges presented by premium payment deadlines and have been accommodating when there have been truly extenuating circumstances. Insureds may want to consider premium financing as an alternative. Dynamics of premium financing could change, however, given the fluid economic situation.

Meanwhile, the hard property market continues.

  • Two years of combined ratios exceeding 100% have forced underwriters to push for profitability.
  • Programs below technical pricing or facing a loss of key capacity are seeing the largest rate corrections.
  • While the extent and impact of the current economic downturn on insurers is unclear, capital has remained available. Nevertheless, insurers have been reducing overall line size and repositioning deployed lines based on profitability — meaning that capacity, at least so far, is available — but at a price.
  • The price, however, may be very steep for buyers with cat exposures and cat losses.
    • In some micro markets, (e.g., manufacturing, life sciences, retail), we are seeing increases ranging from 50% to 300% – and sometimes higher.
  • Shared and layered placements have seen an increase in the number of markets needed to fill the program — making renewal negotiations more complex and longer to finalize.

Along with raising rates, underwriters continue to take a more critical look at exposures, restricting many coverage terms previously offered.

  • Coverage is tightening on contingent business interruption (CBI) and service interruption; we are seeing underwriters scrutinize property schedule valuations.
  • First-party cyber exclusions are common.
  • Many industries are facing heightened challenges: manufacturing, dealers open lot, food/beverage, life sciences, hospitality, primary hab/multifamily, woodworking, metal processing, senior living, waste management and any organization with significant cat exposure.
  • Loss control is still being heavily scrutinized, and buyers should be prepared to address open recommendations prior to renewal. The lack of a response to open recs will have a negative impact on negotiations and on limits available.
  • Insurers are continuing to press for increased deductibles in order to eliminate attritional losses, e.g., water damage and hail percentage deductibles.
  • To sum up the marketplace: capacity restrictions + technical underwriting = continued hardening in 2020.

Insurance buyers can take steps to get the most out of a difficult marketplace.

  • Be ready for constant change in guidelines and rate expectations.
  • Be ready to await approval from senior management, not underwriters.
  • Prepare for heavy scrutiny on engineering.
  • Provide accurate and complete data in submissions (full SOV, loss info, business continuity planning, etc.).
  • Be proactive — and get ahead of the timeline delays that can be expected to grow with the length of the pandemic crisis.


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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