On December 2, the RMSA Board of Directors approved the 2021 renewal, and we’re pleased to continue providing members the broad, pooled coverage offerings that you’ve enjoyed for many years. This year’s global reinsurance market proved
more difficult than many prior, but through the power of pooling we’re able to attract more reinsurance carriers and secure better pricing than members would have encountered on their own.
Difficult market for everyone
This year we renewed our coverage in a globally difficult marketplace. RMSA fared better than average, though it is clear we are entering a “hardening” market unlike what we have experienced for more than two decades.
A market hardens when those that want to offer reinsurance coverage only want to do so with the purchaser taking on a higher deductible, lowering coverage limits, paying a higher cost for the coverage, or worse-case scenario, refusing to renew coverage
entirely. All these factors create more risk and price volatility for the purchaser. While it is common for a single line of business to have a tough renewal, this year RMSA and our peers across the country experienced restricted markets in property,
liability, aviation, and cyber.
What causes a hardening market?
We are closing out on an unprecedented year of natural disasters. Wildfires, earthquakes, civil unrest, and higher costs of construction are all factored into increasing property rates in our state. RMSA’s broker AON, tracks global renewals in the
property marketplace, and cites 2021 renewals averaging over 25% increases. While our pool has had good historical experience in this line of business, we share in our reinsurers global losses when they increase their rates.
Liability marketplace is tough too
The same phenomenon is happening concurrently in the liability marketplace. This market is trying to price an increased pressure on law enforcement liability, nuclear jury verdicts, and legislative liability expansion. In one case this year a civil jury
awarded over $98 million dollars against the State and last year the City of Seattle settled one auto accident for $65 million dollars. These amounts are unprecedented historically.
In our state and nationally, we are seeing legislative trends toward expansion of who can sue and for what reason. When factored together the unprecedented verdicts, social pressure, and legislation have placed undue pressure on reinsurance carriers’
underwriting departments to render higher than normal rate increases across the board.
Aviation
With Boeing being in Washington State, we’re very familiar with the woes of the aviation industry. Loss of income claims have hit this industry hard, which increases the pressure on aviation insurance rates.
Cybercrime on the rise
Also seen in the news are countless stories about municipalities held captive with ransomware or losing money to bad actors through phishing schemes. Municipalities are a popular target for cyber criminals because they often contain vast amounts of sensitive
data that those cyber criminals can use. Cybercrime’s cost to the world has doubled from 2015 to 2021 and is projected to continue along those trends, which is directly driving costs of cyber coverage in the marketplace.
Risk management is vital
These global factors are driving pooled rates, and while we have been very successful beating the averages, we are in a time when risk management is more important than ever. Our goal is to help your organization by providing strategies to mitigate these
risks, help you through them if they happen to you, and lessen the harshness of market impacts. These efforts help keep costs down for all of us and continue to provide value to you through the power of pooling.