2016 forecasts rate decreases in the mid- to- high single digits
Despite rate reductions and low investment returns, commercial lines
insurance is on track for positive underwriting gains in 2016. Favorable
losses across most insurance lines and lack of multiple catastrophic
property losses are driving this trend, according to the annual 2016
Market Outlook issued by Wells
Fargo Insurance, part of Wells
Fargo & Company (NYSE: WFC). The report
forecasts market conditions for a wide variety of product segments,
including liability, workers’ compensation, environmental,
international, technology, and cyber.
“2015 was another buyer’s market for both property and casualty
commercial insurance and affiliated lines, with rate decreases from
medium- to- high single digits to low double digits,” said Doug
O’Brien, Casualty & Alternative Risk National Practice leader.
“Barring any catastrophic events, we expect similar trends will continue
in 2016 for a majority of industries and coverage lines. Rate decreases
are expected in the mid- to- high single digit range for most lines as
new and existing capital is deployed into the property and casualty
market.”
Key Findings –
Wells
Fargo Insurance Market Outlook
-
Higher revenues, payrolls, and property values – With
gross domestic product (GDP) growth expected to slow in 2016, expect
to see higher revenues, payrolls, and property values upon which
insurance premiums are based. This will also help to offset some of
the premium lost by insurers through year-over- year rate reductions.
-
Higher investment returns – Moderately rising interest
rates will provide an environment in which higher investment returns
are possible for insurers.
-
More data analysis – Using data analysis to develop more
sophisticated and accurate predictive patterns and loss trends
continues to increase. Insurance companies, brokers, third-party
administrators, and other vendors are utilizing first-party and
third-party data as an underwriting tool, means of loss control and
way to handle claims more timely and efficiently. However, it remains
unclear whether the data used is interpreted objectively, the
resulting conclusions are accurate, and recommendations are
implemented appropriately.
-
Continued mergers and acquisitions – Achieving profitable
organic growth is becoming more difficult as mergers and acquisitions
in the insurance and reinsurance market continues. This trend will
continue to drive cost efficiencies, increase product line offerings,
provide for a global geographic footprint, and increase market share.
For the complete Wells Fargo Insurance 2016 Market Outlook, visit https://wfis.wellsfargo.com/insights/clientadvisories.
About Wells Fargo Insurance
Recently named Best Insurance Broker in the U.S. by Global Finance
Magazine1, Wells
Fargo Insurance provides solutions for a wide range of customers,
including retail consumers, high net worth individuals, small
businesses, as well as middle market and large corporate customers.
Wells Fargo Insurance writes or places approximately $11 billion of risk
premiums annually in property, casualty, benefits, international,
personal lines, and life products and also includes one of the nation’s
leading crop insurance providers, Rural
Community Insurance Services (RCIS).
About Wells Fargo & Company
Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified,
community-based financial services company with $1.8 trillion in assets.
Founded in 1852 and headquartered in San Francisco, Wells Fargo provides
banking, insurance, investments, mortgage, and consumer and commercial
finance through 8,700 locations, 12,800 ATMs, the internet
(wellsfargo.com) and mobile banking, and has offices in 36 countries to
support customers who conduct business in the global economy. With
approximately 265,000 team members, Wells Fargo serves one in three
households in the United States. Wells Fargo & Company was ranked No. 30
on Fortune’s 2015 rankings of America’s largest corporations. Wells
Fargo’s vision is to satisfy our customers’ financial needs and help
them succeed financially. Wells Fargo perspectives are also available at Wells
Fargo Blogs and Wells
Fargo Stories.
1 Ranking includes Wells Fargo Insurance Services USA,
Inc., Wells Fargo Insurance, Inc., and Rural Community Insurance Company
