The liability market is continuing to harden driven by factors including increasing loss severity and a greater percentage of claims that are litigated, Willis Towers Watson says (WTW).

“Deteriorating loss trends are still negatively impacting underwriting profitability,” WTW says in an October update.

“This is driving insurers to require ongoing rating increases while narrowing their underwriting appetites, re-evaluating coverage and mandating changes to program structures.”

Excess layer general liability renewals continue to experience year-on-year rate increases but renewals are suggesting a more moderate range of increases.

Primary liability is seeing rate gains of 0-20% while excess layers are rising 10-50%, with gains higher when incumbent insurers don’t renew, forcing the risk back into the market.

“There is a significant reduction in global capacity from insurer consolidation through recent mergers and acquisitions, market exits, withdrawal of capacity by some insurers and underwriting restrictions,” the report says.

In property, loss affected or challenging risks are seeing rate rises of 25%, catastrophe exposed risks are seeing gains of 10-20% while rises elsewhere are around 5-10%.

Australia has experienced catastrophes including east coast flooding and WA’s Cyclone Seroja this year, while globally the impact of Hurricane Ida in the US and July flooding across Europe will also affect the insurance market.

“We expect rate increases to ease for the remainder of 2021, but we are very mindful of what impact recent catastrophe events can have on the market in 2022,” WTW says.

A “two-speed market” is evident in professional indemnity (PI), with the construction and property sector bearing the brunt of coverage reductions and increases in premiums.