The primary casualty insurance market, as well as umbrella and excess liability markets, remained competitive throughout 2009. Competition was driven by additional capacity, as insurers looked to write new business to offset premium lost due to clients’ exposure decreases. Diversification of casualty programs was a key concern in light of the financial conditions; the greatest impact was felt in the excess liability area, as collateral issues made it more difficult for insureds to leave a primary carrier. Underwriters became more vigilant in their scrutiny of insureds’ financials, leading to a more conservative approach regarding the acceptability, form, and amount of collateral to secure obligations under loss-sensitive programs.

Looking Ahead

Strong competition for primary casualty insurance is likely to continue as insurers remain relatively overcapitalized. Companies that have not marketed their programs in 2009 should consider doing so this year. The credit market continues to cause turmoil in bank reviews and overall collateral assessment. Insureds are advised to monitor insurer financials and diversify their program portfolios.