New CRC index shows moderating excess/umbrella rate increases

Wholesale giant CRC Group’s new monthly REDY index for excess casualty and umbrella business shows that rate increases eased back to 15.5 percent in June from 16.5 percent in April and 18.5 percent in May in the latest sign of moderation of hardening in the US commercial insurance sector.

Although the index only points to one month of deceleration at a level that is within the range of the 14.3 percent to 19.2 percent monthly increases seen over the last two years, it comes after retail brokers Aon and Willis earlier this year reported signs of easing of the hard market conditions.

The CRC REDY index – the latest to be launched by the firm after it unveiled private D&O and cyber indexes earlier this year – revealed that 30 percent of clients saw average year-on-year renewal change of 20 percent or more in June, down from 35 percent in May and 33 percent in April.

Still, more than half of clients saw rate increases of at least 10 percent in the month, with 24 percent experiencing a price hike of 1 to 9 percent and 24 percent renewing flat.

In commentary accompanying the latest index release, CRC said that the excess and umbrella space is seeing new carriers entering that are aiming to take advantage of the market disruption, but most of those new entrants are still in formation or just getting started.

It added that the most difficult classes in the excess casualty segment include high hazard products, transportation-related accounts, habitational and hotels, New York construction, and any risk with sub-par loss experience.

The Truist Insurance Holdings subsidiary said that excess casualty losses are continuing to escalate because of social inflation.

“The self-reinforcing trend of higher verdicts leads to higher expectations for awards and higher settlements. Litigation funding is gaining momentum as investors look to profit from this judicial climate,” it added.

Back in April this year this publication reported that two years on from the seismic shift in US lead umbrella and excess casualty insurance pricing conditions there were signs that the pace of hardening is beginning to decelerate, as buyers moved into another renewal cycle of rate increases with budgets stretched.

That was borne out by data from Aon in May that confirmed that average rate increases for large, complex umbrella/excess casualty accounts in the US eased back from 61 percent in Q4 2020 to 44 percent in the first quarter, representing a “marked improvement” in the marketplace amid signs of increased competition.

Willis Towers Watson had earlier suggested lead umbrella and excess liability rate increases were beginning to show signs of deceleration and reduced volatility at renewal.