“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” –Winston Churchill

As 2020 comes to a close, challenging conditions persist for both clients and the property & casualty industry. Reduced capacity, higher retentions, rising rates, and restrictive terms and conditions are just a few of the obstacles buyers currently face.

The firming pricing landscape of 2019 gave way to a new reality in 2020 as insurance markets
reduced capacity, tightened terms, and delivered some of the steepest premiums ever reported. Adding to this, COVID-19, a rolling shutdown of the global economy, historically low interest rates, natural catastrophes and civil strife loomed large. Our clients found themselves asking “what next?”

Though the uncertainty of the current marketplace is likely to prevail for some time, opportunities remain for those who are willing to think differently and challenge the status quo. Rather than looking backward, reexamining risk portfolios and analyzing how to
most effectively deploy scarce capital can make a marked difference.

Key factors underlying the current market:

• Sustainability of an economic recovery, introduction and deployment of a vaccine, and level of consumer and business confidence and investment

• Concerns of loss volatility and “return on capital” have sharpened the market’s focus on
  underwriting profitability

• Uncertainty often yields conservatism—an emphasis on risk quality, efficient program structure and rate adequacy will guide future underwriting decisions Increased litigation and accompanying uncertainty around the impacts of COVID-19, social justice issues
  and an aggressive plaintiff’s bar

• Changing reinsurance market with demand for reinsurance outpacing supply

• Investments in improvement safety help control losses

• New administration lends itself to increased potential for legislation reform and unpredictability

The November 2020 Lockton Market Update (opens a new window) dives deeper into these trends, delivering a comprehensive review of commercial insurance market conditions and provides an insightful look across industry sectors. Lockton’s product line experts share actionable strategies for navigating the current market and finding opportunity amidst the uncertainty.