Weathering a Hard Market


Insurance Brokers must take action now to protect clients for the long term

In the past year, the pandemic has disrupted or stalled so many aspects of our lives. It stands to reason that the insurance industry, which helps to buoy so many businesses in times of disruption, is feeling the ripple effects. Insurers and brokers are operating in a hardening market – a period of rising premiums and decreasing capacity for insurance – and it calls for us to partner in new ways to ensure clients can secure and sustain the protection they need.

We’re overdue

The last truly hard market we experienced was 20 years ago, following September 11th and the global market crash that followed. Waiting two decades for a hard market is unusual: Historically, one arrives every five to seven years, and always after a triggering event. The pandemic, in many ways, is providing that catalyst now, and it presents insurers with challenges on several fronts:

  • The current market is delivering lower investment returns and putting downward pressure on share price.
  • Businesses facing mounting losses due to COVID-19 have filed business interruption claims with their insurers, and the High Court has ruled in favour of insureds in some circumstances. This has generated higher losses for insurers, as well as a need for greater reserves.
  • The recession is restricting spending as companies generate less new business and start-ups hesitate to enter the market.
  • Reinsurance rates are increasing to account for an increased rate of claims from insurers.
  • Prices are now increasing across the commercial market, particularly in Lloyd’s and financial lines, and we are now witnessing double-digit increases in the regional markets too.

A strategy for sustainability

To manage these challenges and align with current market conditions, Travelers plans to raise rates to a sustainable level. In previous hard markets, insurers have increased rates by 50 to 100 percent or withdrawn from the market altogether. We, at Travelers, are applying more moderate and sustainable rate increases as the market continues to harden. In doing so, we are aiming to avoid unexpected increases in the longer term, better protect our customers and provide certainty and clarity for our brokers.

At the same time, the current market conditions are changing how insurers manage the risks they are asked to underwrite. The underwriting process becomes more complex and time-consuming in these circumstances. But brokers can take several actions to help their clients get the protection they need in a hardening market.

“First, it’s important for brokers to work with us early and proactively on upcoming renewals,” said Stephen McKenna, Head of Distribution for Travelers Europe. “The same applies to new business. For the best results, it’s key we work together early and build a pipeline of future opportunities we can mutually commit to and deliver the best bespoke solutions for our customers.”

Additionally, Travelers is building its e-trading capability to support these efforts.

“We are looking to launch a suite of e-trade products that will support our brokers on fast-flow and non-complex business,” McKenna said. “This will include quote and bind capability via our MyTravelers web portal and/or Acturis.”

If you would like to talk to Travelers about the issues raised in this article, please contact your local Travelers representative or account manager.

Authored by Travelers


About Travelers

We wrote the first auto insurance, the first aircraft liability insurance, and even the first personal accident cover for astronauts.

In today’s fast-changing world, this  heritage of adventure really counts. With an extended network of underwriting, claims management, and industry experts in 125 countries, we’re here to insure your clients’ ambitions – no matter their size and scope. Our expertise and experience deliver policies that help them continue their journey.

With businesses facing ever more emerging and evolving issues, our suite of insurance products offers bespoke cover for each risk, and our commitment to genuine, caring partnerships means we’ll always be there to advise and support our clients and our broker partners, – whatever the future holds.

The Travelers Companies, Inc. (“TRV”) is a leading provider of property liability insurance for motor, home and business. The Group has more than 30,000 employees and operations in the United States, Canada, UK and Ireland.

The group has total assets of approximately $110 billion, shareholders’ equity of $26 billion and total revenue of $32 billion, as of December 31, 2019. Our European based operations offer our customers a wide range of coverage through Travelers Insurance Company Limited, Travelers Syndicate Management Limited (Syndicate 5000 at Lloyd’s), Travelers Underwriting Agency Limited and Travelers Insurance Designated Activity Company.