State of the Property and Casualty Market - Q2 2018


As we enter into the second half of 2018, the state of the Property & Casualty (P&C) market looks strong with multiple sources of opportunity on the horizon.  One thing is certain, after the catastrophic damage from 2017, underwriters are taking a more in-depth look into potential risks. Brokers with a “client-first” mentality are setting themselves apart from the competition by working intensely with their clients to put policies into place that mitigate risks and keep premiums as low as possible.

Multi-family/Hospitality Real Estate

Insurers are still licking their wounds after the natural destruction of 2017.  The multifamily and hospitality sectors continue to suffer losses (water, fire, etc.) at a higher rate than other asset classes.  The natural disasters of 2017 also left more long-term destruction once the storms passed, including pollution hazards such as mold growth due to windblown roofs and flooding that occurred.  This ongoing damage is causing premiums in some areas to increase, and there is a movement in the industry to potentially change how policies are written and priced going forward. 

Premium for multi-family risks are becoming reliant on several factors, such as the age of roofs, adequate loss control measures to mitigate risks, and historical claim experience.  Depending on the location of the risk and their claims history, premiums are expected to rise 3%-20% in 2018. 

The construction market remains strong with large developers continuing to have a robust pipeline. The insurance marketplace for builder’s risk insurance also remains competitive as more capacity enters the market. One area that is under a microscope is wood-frame construction.  As capacity remains available, underwriters are tightening their programs with rate increases anywhere between 5-25%. Underwriters are asking for more data and requiring their insureds to follow stricter security guidelines to help mitigate some of the losses the industry has been facing. 


After the unprecedented 2017 hurricane season, premiums are on the rise.  Experts are forecasting 2018to have another active hurricane season, with the second tropical storm of the season already classified as a hurricane within the past couple weeks. There is an increasing number of factors being taken into consideration when writing property policies in 2018 and comprehensive risk evaluations are now industry standard.  The age and architecture of buildings and roofs, property location, and past claim history are all heavily considered. 


The marketplace for earthquake insurance continues to climb and it is expected that there is $750M-$1B of opportunity in premium sales in the United States alone. A catastrophic earthquake in California has not occurred since 1994, and scientists have deemed the East Bay as a “ticking timebomb.”  Most companies understand that purchasing protection is an essential component to their business, rather than a luxury.  Because of the high level of risk involved around East Bay, premiums have skyrocketed with a 10-50% increase.  Other areas outside of the East Bay area are mostly shielded from these high rates, depending on the age of the structure and its construction type. 

General Liability and Automobile

For years now, premiums for casualty policies have not kept up with costs incurred for work-related incidents which has caused a rise in premiums.  However, companies focused on reducing and mitigating claims are experiencing better results than those companies who have solely relied on market conditions in the past to improve their insurance costs. Companies that have benefited from implementing and executing effective safety and loss control programs to reduce their exposure to risk find themselves in the best position for premium savings. 

Automobile losses continue to be on the rise and so do insurance premiums.  Some believe there are signs that things may change as insurance companies continue to evaluate their books, understand the level of risk they are willing to take, and discover a premium rate at which they will remain profitable.  Due to the increase in auto accidents, auto repairs costs, and distracted driving, pricing will continue to increase for the foreseeable future for companies that have poor loss experience.

Cyber Security

For many years, cybersecurity insurance purchases were growing at a rapid rate and continued to climb. More recently, purchase rates for cybersecurity have slowed from a 50% expected growth rate to roughly 15%. Historically, larger companies were buying cybersecurity policies and were less likely to shop for new policies, decreasing the demand.  Businesses with under $500M in revenue have hesitated to purchase cyber security insurance in the past; however, as those companies continue to understand their vulnerabilities and the impact of a cyberattack, I believe the demand will continue to rise.

The state of the P&C insurance market is dynamic, always dependent on the day.  It is important to stay ahead of your renewals as we enter Q3 and the peak of hurricane season.  With the current state of the economy and various forms of technology available in the market, insureds are presented with great opportunity in controlling costs and protecting their balance sheets.