Burns & Wilcox COVID-19 Update Read more here

Market Overview - Casualty

1 July 2021

Anyone involved in the insurance market since early 2020 knows it has been a challenging time with higher premiums and limited supply, Casualty included. However, we are happy to report light at the end of the pandemic tunnel tied directly to the reopening of the United Kingdom’s economy.

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Effective May 2021, pubs, bars, cafes, and restaurants were allowed to serve customers indoors. Museums, cinemas, and children's play areas were also opened along with theatres, concert halls, conference centres and sports stadiums. Hotels, hostels and B&Bs were able to begin hosting guests. This evidence of the economy reopening is further supported by a recent article by The Guardian that reports travel (according to mobility data) among U.K. residents in April and May 2021 was only 5 percent below levels recorded in January 2020—before the pandemic started. 

This has been a welcome sight that is positively affecting Casualty renewals. Rate increases average roughly 8 percent in 2021 but have flattened compared to a year ago. Fortunately, the losses have not been as significant as experienced in other areas, including Property. 

There are a few trends we are witnessing in the Casualty area:

  • Carriers are leveraging the availability of Property Insurance with Casualty coverage.
  • Reinsurance has been one of the biggest factors of limited coverage capacity.
  • Notably, there has been an uptick in activity for many manufacturers, hospitality operators and retailers in recent months.
  • The trickle-down effect of COVID-19 has stabilized, but remains significant, particularly with business interruption losses.

The team at Burns & Wilcox adjusted to market demands in the weeks immediately following the start of the pandemic by making it easier for clients to remain covered—pursuing every option available. We are focused on building and maintaining relationships; serving as an invaluable resource for insurance brokers and businesses now and long after this pandemic has subsided. 

Of course, all the customer service in the world will not matter if there is not a level of experience and quality that goes with it. Our team has that experience with many coming from a Lloyd’s of London background. Our goal is to solve problems for brokers and to provide a proper underwriting solution to the best of our ability. Recent examples include:

  • Exploring more carrier options for clients with larger needs.

Brokers could often place £100 million with just three to four carriers before 2020. Now, at least double the carriers are likely needed to get to that coverage level since any individual carrier has sought to minimize risk. Burns & Wilcox is looking to utilize this reduction in capacity on selected excess layers of coverage where needed. 

  • Ensuring necessary casualty insurance is still in place.

Before the country’s economy began to further open, those in the hospitality or events space were suffering from limited to no revenue for months at a time. We were able to work with these businesses to find a way to maintain the public liability non-operational premises risk and the employer’s liability coverage that is required by law, provided they had employees (many of whom were working remotely). Now that these businesses are again generating revenue, their cover will need to increase back to pre-pandemic levels. 

  • Paying premiums on a minimum deposit basis.

Pre-pandemic the premiums were generally on a 100% minimum and deposit basis, Burns & Wilcox showed flexibility by charging 75-80 percent minimum and deposits to help support cash flow challenges. Alternative adjustments were made on a case-by-case basis because of shutdowns and economic trends. 

  • Preparing clients for renewals.

One of the biggest challenges that clients have in preparing for Casualty renewals is how to strategise their risk assessments and identify where some of the most significant risks will come from. Burns & Wilcox has been working with insurance brokers, providing informational packs to help prepare their clients for renewals.

  • Providing value-added support to your clients. 

When an injury to a customer occurs, it can be difficult for a business’ professional staff to know how to handle the situation. From what they say to a customer regarding liability, to how a forklift injury should be addressed, training clients’ staffs have been identified as an area that should be emphasised. We have provided additional materials to help businesses address the procedures that need to happen with their staff. 

Stabilization is likely ahead 

It is unlikely that rates will spike any further but our hope is that there may be circa 5-10% percent increases still available over the 2nd half of 2021  

Some areas of specialty coverage may become harder or more expensive to purchase in this harder market. One example is Abuse Cover, which is an option for sports governing bodies and teams, given some of the media coverage around verbal or physical abuse of young athletes in training. 

Regardless of the immediate trends, proper underwriting will continue to be one of the biggest needs that clients have. Our fully empowered professionals can address needs and provide options efficiently. Being nimble and agile in providing this service will remain critical. Innovation and digitisation will increase both to provide client convenience and to help better manage risk. 

Finally, the strong relationships we with have with carriers will continue to serve us well. While our team may not be massive, it is mighty, with a level of experience that is unmatched. That will allow us to package the right formula together to address the challenges our clients are facing. 

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