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Survey Report

Insurance Marketplace Realities 2021 – International casualty


November 18, 2020

The market for international casualty has begun to see significant impact from recent social and economic trends.

Rate prediction

Rate prediction: International casualty
  Trend Range
Overall increase (yellow line, purple triangle pointing up) +10%

Key takeaway

The market for international casualty has begun to see significant impact from recent social and economic trends, with individual results varying widely.

Data and analytics are emerging as essential tools for guiding the design and delivery of coverage.

  • Recently developed broking tools and analytics offers insurance buyers visibility into market trends that help guide market access points, program structure and data-driven, defensible strategies for approaching the marketplace.
  • Analytics offer a nation-wide view of the market by aggregating broking data.
  • Key data analyzed for international casualty includes:
    • Claims and loss rates
    • Coverage arranged (public/products liability, PD, EIL, PFL, auto, etc.)
    • Program structure including limits and the number of local policies
    • Insured industry and size
    • Comparative/similar insureds
    • Program administration/service needs

While there’s been little direct impact on international casualty from COVID-19 claims, the instability of the broader insurance marketplace can be felt at international casualty renewals.

  • The market for international casualty continues to evolve in light of all the recent economic and social unrest.
  • Individual results vary widely, with some insureds still benefiting from rate improvement while most others renewing with single and double-digit rate increases. Our best estimate for most buyers as we look ahead to 2021, however, is a 10% increase.
  • Coverage improvement and reductions in rate remain available, with certain caveats around claims statistics, exposure information and marketing strategies, among other items.
  • Insureds who have experienced significant claims and those with higher-risk exposures are the most vulnerable in this evolving marketplace. We recommend that insureds initiate renewal discussions early and explore all possible options.
  • Buyers who will achieve more positive results in the market are those who:
    • Deliver clear and consistent underwriting data and related documentation
    • Leverage their purchasing with strategic carrier relationships
    • Demonstrate that they have communicated detailed risk management protocols to their various stakeholders
    • Consider marketing opportunities carefully to maximize those opportunities
    • Partner with their broker, carriers and internal teams to take a disciplined approach to the renewal timelines, allowing for a thorough review of localized coverages and claims handling plans
  • With many businesses reporting a decrease in revenues, that reduction in exposure may not equate to a 1:1 reduction in premium. Global programs administration costs are somewhat inelastic and are a significant portion of the total program costs, so insureds may feel an actual rate increase as their exposures drop.
  • As organizations look to measure the quality of their global programs, we recommend taking a holistic approach and placing value on issues beyond price, such as the delivery of information and service. The most effective carrier partners are those who deliver accurate and timely policy documents, quality post-binding services around the world, and offer an insured the ability to influence localized policy coverage terms.

Capacity remains available, despite outside pressures.

  • The full impact of the global economic downturn caused by the COVID-19 pandemic is uncertain, however over the last few months there has been a palpable shift.
    • Reduced interest rates will impact carrier investments and overall profitability.
    • Other P&C lines continue to require rate increases, which has begun to influence underwriters of international programs to follow suit and raise rates.
  • In previous quarters, upward pressure on rate had been mitigated by plentiful capacity. However, we anticipate current market participants will look to stabilize their capacity rather than continuing to expand.
  • Underwriting appetite is under review by insurer leadership, and so line underwriters are not permitted to be as flexible as they have in the past.
  • Underwriters are seeking clear and consistent exposure information from insureds, limiting or even removing the ability to obtain coverage for “if-any” exposures, as well as excess DIC coverage, without clear details about the primary coverage in local geographies.
  • On a positive note, carriers that write global lines of coverage are often able to partner with insureds on other lines, offering the opportunity to reduce overall cost through economies of scale
  • Multiyear agreements are available in some instances and can offer coverage and rate certainty and decreased administrative burden.
  • For certain insureds with large and complex international risks, European-based markets can offer an alternative access point with potential benefits:
    • Customarily higher primary limits and expanded coverage territory
    • Higher or full limits on certain unique coverages, such as pure financial loss and extended products liability
    • Key coverage extensions included in the master policy, enabling a broader coverage territory
  • Recent global carrier mergers have yet to reduce the abundant supply of capacity. In many cases, the M&A activity, as well as the development of strategic partnerships in the marketplace, have enhanced market offerings by bolstering underwriting depth, expanding capabilities (in various lines of business, claims, loss control and technology) and broadening international office footprints.

We are seeing market maturity for international casualty.

  • Newer carrier entrants are working to attract insureds with fresh talent, forms and tools, while the more mature markets continue to invest in capabilities and information.
  • Certain newer capacity is available from carriers who have historically only written U.S. domestic lines and have expanded their offering to include international P&C. Additional offerings emanate from European carriers with experience writing international casualty who are expanding their offerings to include U.S.-domiciled insureds.

Achieving optimal overall price includes a discussion of umbrella attachment points.

  • Buyers need to review how international casualty should attach to the excess and umbrella (i.e., retained limit vs underlying limits) as well as the attachment point itself. As these factors can make a difference in overall cost.
  • With many international casualty programs charging lower rates than the primary umbrella, pushing up attachment points may offer value opportunities (i.e., higher local limits and pricing relief in the umbrella/excess layers.)

Combining P&C into packages may have strategic advantages, but buyers need to be aware of the impact the hardening property market may have on the combined program.

  • Buyers who combine casualty with property into a package are likely to feel the impact of the hard property market, even if the exposures are relatively small.
  • Catastrophe limits continue to be under pressure, requiring more underwriting scrutiny and cost.
  • Impacts range from limited (if any) coverage for catastrophic events to larger minimum deductibles.
  • Buyers can take steps to minimize these negative pressures:
    • Deliver clear and consistent underwriting data, values and business interruption data, including construction, occupancy, protection, exposure (COPE) information.
    • Leverage their position with strategic carrier relationships.
    • Demonstrate that they have strong loss controls in place and the resolve to improve their risk profile.

COVID-19 impact on underwriting international casualty continues to evolve.

  • Insureds should be prepared to provide additional information, more than in previous years, with a focus on how their organization is protecting staff and customers from the disease.
  • Within an international casualty program, coverage often includes foreign voluntary workers compensation (FVWC), which so far is the most significant target for coverage discussion around COVID-19. This coverage commonly extends to endemic disease with state-of-hire WC benefits for employees who are working outside of their home countries. However, for coverage to apply, their travel needs to be in the course of business.
  • Coverage may also be triggered in a business travel accident policy for someone who contracts the virus while in the course of business — although several carriers are pursuing coverage clarification.

Brexit’s approach will require attention.

  • With Brexit scheduled to take effect later this year, carriers and brokers have been preparing by repositioning certain underwriting and/or service functions (e.g., freedom of service (FOS) infrastructure) to alternative European locations (e.g., Luxembourg, Ireland, Spain and Belgium), requiring a fair amount of movement and retraining of staff. Carriers are looking to offer flexibility where they can. However, insureds and brokers are encouraged to seek details where there are unknowns in advance of renewals.
  • As a general note, we strongly encourage insureds to partner with their broker and carrier to weigh the pros and cons of an FOS structure for a casualty program. The benefits that are generally available on a property program are often less clear on a casualty program. Programs that replace local policies throughout Europe with an FOS policy may reduce costs but may also lose country-specific broad terms that are only available in each country.
  • Additionally, insureds who may have received an FOS policy from a carrier’s U.K. office, also representing local coverage for the U.K., should consider the need and benefits of requesting a separate local policy in the U.K. at renewal.
  • When a renewal involves a potential change regarding where an FOS policy will be issued, we suggest carefully considering the implications of the governing laws of that policy. For example, the U.K. relies on common law whereas other European countries rely on civil law, and there will be differences in how claims are managed.

Changes in market regulation and issues of compliance are crucial.

  • State-driven regulation and rising protectionism continue to impact the marketplace. Federal agencies in some regions are requiring participation of in-country insurance capacity in global programs, which impacts pricing, exportability, control and renewal timing. Buyers should be aware that any restrictions on the exportability of risk and premium will limit the corresponding amount of underwriting and claim settlement authority that can be centralized.
  • Enforcement remains prevalent around premium payment warranties (e.g., cash before cover) in some countries, which should encourage buyers and their brokers to be ready to bind 30+ days in advance of renewal.
  • Insurance and tax audits, as well as requirements for insureds to provide know-your-client (KYC) documentation, are evidence that local regulators are actively seeking to ensure that programs are locally compliant. While this has become more common in certain regions, including North America, Central America, and Europe, requests have also emerged in the Middle East.

Global programs of all sizes are becoming more sophisticated.

  • Buyers with smaller international risks may have opportunities to impact their total costs and ensure compliance by taking a centralized approach to certain functions, starting with a focus on the safety of their traveling employees through a global approach to FVWC, kidnap, travel assistance and health coverages.
  • For companies with existing global programs, opportunities are available to streamline operations by leveraging relationships with a select number of global carriers, minimizing coverage gaps and ensuring economies of scale.
  • For the buyers of large, complex global programs, clarity of coverage will be increasingly important, not just at the master policy level, but also at the locally admitted level. Also, contracts with third parties may include specific insurance requirements (e.g., unique local coverages and/or higher limits) that need to be contemplated in the program design.
  • One of the ways higher admitted limits can be obtained is by asking the international casualty carrier to raise its master policy limit, enabling flexibility around what limits can be localized. An additional benefit of raising the primary limit, as mentioned above, is driving pricing relief in the excess layers, an important feature when excess limits are more expensive. Alternatively, an umbrella carrier that has a global network can issue its own local umbrella policy as and where needed. Teams should consider both options and compare associated costs.

Program administration remains an important focus.

  • In a marketplace that does not generally see the same type of claims frequency or severity as the U.S. domestic lines, multinational programs often require more administration costs, from carriers, brokers and insureds. As a result, all parties should look for ways to drive value through efficiencies.
  • Key to achieving a program that delivers value is a disciplined approach to timelines, with teams beginning the renewal process early and documenting clear objectives up front.
  • International casualty programs require significant administration and collaboration, so rather than differentiate purely through price, carriers and brokers are creating and/or enhancing operational tools, leveraging technology and offering underwriting flexibility and/or enhanced transparency around country-specific coverages.
  • Premium allocations require a defensible and consistent methodology, so insureds and brokers should initiate discussions early in the renewal timeline, with consideration of issues such as taxes and premium/risk exportability and to ensure timely execution.
  • Several carriers supplement the delivery of international programs with online platforms, some of which are made available to insureds and brokers. The ability to reduce friction and improve clarity continues to be a differentiator, so carriers continue to invest in tools that offer transparency into network instructions, posting of policy documents and other improvements in efficiency.
  • Shared online access to claims data remains a topic of conversation about future enhancements for several carriers.

Alternative risk programs are likely to be more attractive as rates increase.

  • The market for fully fronted programs remains fairly limited; however, they can be popular for insureds who wish to control cost allocations and centralize coverage documentation. If rates on global programs increase in the risk transfer market, we expect insureds will consider utilizing captives to transfer risk and/or facilitate admitted coverage.
  • Carriers that write programs with significant retentions are often well-established and have the underwriting expertise, global network, technology and cash flow capabilities to handle these programs effectively.
  • Programs with a reinsured retention often generate additional administration costs and can require collateral. The calculation of administrative costs and collateral are dependent on a number of factors, including the number of local policies, volume of claims, limits issued, etc. Upward pressure on those costs can be mitigated in certain cases by leveraging the relationship with the same carrier across other products.


Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. 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 advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed subsidiaries of Willis North America Inc., including Willis Towers Watson Northeast Inc. (in the United States) and Willis Canada, Inc.


Director of Operations,
Global Services and Solutions
Corporate Risk and Broking

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